> I want to write something like apply templates to all 
> elements except CHILD4. How do I do this?

In XSLT 2.0:

<xsl:apply-templates select="* except CHILD4"/>

In 1.0, it's simplest to apply-templates to all elements, and have a no-op
template

<xsl:template match="CHILD4"/>

(using a special mode if necessary)

Michael Kay
http://www.saxonica.com/