This is a grouping problem you don't need any of the tricky xpath <<
stuff.
just something like

<chapter>
<xsl:for-each-group   select="node()" group-starting-with="title">
<sect1>
<xsl:apply-templates select="current-group()"/>
</sect1>
</xsl:for-each-group>
</chapter>

well that only makes sect1 I'd need a bit more context to know how you
can infer nested sections.

David