namespaces and temporary trees (was Re: grouping

The reason your div is coming out in the mods namespace is that that is the namespace assigned by the stylesheet to the null namespace, which is the namespace the div is in. If you want it in another namespace, or none, change or remove that null namespace declaration at the top of the stylesheet. (And/or make the namespace explicit in the literal result element.)

If this isn't sufficient, someone who knows XSLT 2.0 better will have to give you advice on the nice features the draft gives for namespace fixup, to have your namespaces not only behave well, but look good too.