general string replace problem

I'm still having problems using Jeni Tennison's general string replace
template discussed in the FAQ:
http://www.dpawson.co.uk/xsl/stringreplace.html#d44e34517

I must be applying it incorrectly, but I can't find a complete example of
its being used, nor do I see what I'm doing wrong.

My input file is:

<CONTENT>This is input text.</CONTENT>

My stylesheet is: [sorry for the length]
<?xml version='1.0'?>
<xsl:stylesheet version='1.0'
  xmlns:xsl='http://www.w3.org/1999/XSL/Transform'
  xmlns:foo='http://www.foo.org'>
<xsl:output method='text' indent='no' />

<xsl:template match='CONTENT'>
<xsl:variable name='test'>
<xsl:call-template name='replace_strings'>
 <xsl:with-param name='input_text' select='text()'/>
</xsl:call-template>
</xsl:variable>
<xsl:copy-of select='$test'/>
</xsl:template>

<foo:string_replacement>
  <foo:search>
    <foo:find>This</foo:find>
    <foo:replace>That</foo:replace>
  </foo:search>

  <foo:search>
    <foo:find>input</foo:find>
    <foo:replace>output</foo:replace>
  </foo:search>
</foo:string_replacement>

<xsl:template name="replace_strings">
 <xsl:param name="input_text" />
 <xsl:param name="search">1</xsl:param>
 <xsl:variable name="replaced_text">
  <xsl:call-template name="replace-substring">
   <xsl:with-param name="text" select="$input_text" />
   <xsl:with-param name="from"
select="document('')//foo:search[$search]/foo:find" />
   <xsl:with-param name="to"
select="document('')//foo:search[$search]/foo:replace" />
  </xsl:call-template>
 </xsl:variable>
 <xsl:choose>
  <xsl:when test="$search &lt; count(document('')//foo:search)">
   <xsl:call-template name="replace_strings">
    <xsl:with-param name="input_text" select="$replaced_text" />
    <xsl:with-param name="search" select="$search + 1" />
   </xsl:call-template>
  </xsl:when>
  <xsl:otherwise>
   <xsl:value-of select="$replaced_text" />
  </xsl:otherwise>
 </xsl:choose>
</xsl:template>

<xsl:template name='replace-substring'>
   <xsl:param name='text'/>
   <xsl:param name='from'/>
   <xsl:param name='to'/>
   <xsl:choose>
     <xsl:when test='contains($text, $from)'>
       <xsl:value-of select='substring-before($text, $from)'/>
       <xsl:copy-of select='$to'/>
       <xsl:call-template name='replace-substring'>
         <xsl:with-param name='text'
           select='substring-after($text, $from)'/>
         <xsl:with-param name='from' select='$from'/>
         <xsl:with-param name='to' select='$to'/>
       </xsl:call-template>
     </xsl:when>
     <xsl:otherwise>
       <xsl:copy-of select='$text'/>
     </xsl:otherwise>
   </xsl:choose>
</xsl:template>

</xsl:stylesheet>

The result I get (using either XT or Saxon from the command line) is:
Thatoutput is output text.
instead of the desired:
That is output text.

I'd be grateful if anyone could show me the error of my ways.

Chris


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