flat structure to hierarchy

I need to transform a flat structure XML to a more structured one with
groupby.

Input:
<rows>
  <row>
    <tag1>a1</tag1>
    <tag2>b1</tag2>
    <tag3>c1</tag3>
    <tag4>d1</tag4>
  </row>
  <row>
    <tag1>a2</tag1>
    <tag2>b2</tag2>
    <tag3>c2</tag3>
    <tag4>d2</tag4>
  </row>
  <row>
    <tag1>a2</tag1>
    <tag2>b2</tag2>
    <tag3>c3</tag3>
    <tag4>d3</tag4>
  </row>
  <row>
    <tag1>a3</tag1>
    <tag2>b3</tag2>
    <tag3>c4</tag3>
    <tag4>d4</tag4>
  </row>
</rows>

Output:
<records>
  <record level="0">
    <tag1>a1</tag1>
    <tag2>b1</tag2>
    <record level="1">
      <tag3>c1</tag3>
      <tag4>d1</tag4>
    </record
  </record>
  <record level="0">
    <tag1>a2</tag1>
    <tag2>b2</tag2>
    <record level="1">
      <tag3>c2</tag3>
      <tag4>d2</tag4>
    </record>
    <record level="1">
      <tag3>c3</tag3>
      <tag4>d3</tag4>
    </record>
  </record>
  <record level="0">
    <tag1>a3</tag1>
    <tag2>b3</tag2>
    <record level="1">
      <tag3>c4</tag3>
      <tag4>d4</tag4>
    </record
  </record>
</rows>

You can assume that rows are sorted and related rows are grouped together.
It seems that some sort of lookaheads are needed. How can this be done
efficiently in XSL?

Thanks in advance.
Alex


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