xml nodes with spaces (at start, end, or just spaces) not sh

Hi,
I am trying to display xml that has formatting and also has a form of
'track changes' in a browser using xsl.
The 'track changes' is implemented by using <inserted> and <deleted>
tags to identify changes (these are escaped with &lt; &gt; etc. in the
XML).
I want to display the latest version of the content so I show insertions
and do not show deletions.

Sample XML (snippet):
<Text>The&lt;inserted&gt; &lt;/inserted&gt;quick&lt;deleted&gt;
&lt;/deleted&gt; brown fox&lt;inserted&gt;
&lt;/inserted&gt;jumped&lt;inserted&gt; &lt;/inserted&gt;over the
lazy&lt;deleted&gt; &lt;/deleted&gt; dog.</Text>



....which without the escaping becomes: 
<Text>The<inserted> </inserted>quick<deleted> </deleted> brown
fox<inserted> </inserted>jumped<inserted> </inserted>over the
lazy<deleted> </deleted> dog.</Text>



So I am trying to get this to show as "The quick brown fox jumped over
the lazy dog."

Sample XSL 1 (snippet):
<xsl:template match="deleted"/>
 <xsl:template match="inserted">
   <xsl:apply-templates/>
 </xsl:template>
<xsl:template match="br">
   <br/>
   <xsl:apply-templates/>
 </xsl:template>
  <xsl:template match="i">
  <i>
  <xsl:apply-templates/>
  </i>
 </xsl:template>
<xsl:template match="b">
 <b>
 <xsl:apply-templates/>
 </b>
 </xsl:template>



Sample XML 2 (snippet):
<xsl:template match="deleted"/>
   <xsl:template match="inserted">
   <xsl:copy-of-select='.'/>
 </xsl:template>
    <xsl:template match="br">
   <br/>
   <xsl:apply-templates/>
 </xsl:template>
  <xsl:template match="i">
  <i>
  <xsl:apply-templates/>
  </i>
 </xsl:template>
<xsl:template match="b">
 <b>
 <xsl:apply-templates/>
 </b>
 </xsl:template>


I have tried both of these solutions and neither work. I need to be able
to have formatting inside the insertions - hence the attempt to use
<xsl:apply-templates/>.
The output I am getting is "Thequick brown foxjumpedover the lazy dog."
- as though the spaces were never inserted.

Thanks in advance for any help or suggestions.

Andy