you don't appear to apply normalize-space anywhere, simplest being
something like

changing

	<xsl:template match="text()[normalize-space(.)='']"/>

to
	<xsl:template match="text()">
<xsl:value-of select="normalize-space(.)"/>
</xsl:template>

or you might (or might not) want to re-insert a leading or trailing
space as shown in teh code fragments at DaveP's site that you quoted.

David