Am Freitag, 19. Oktober 2007 schrieb Michael Kay:
[...]
> Use modes to make it clear which templates apply to which phase of
> processing.

I tried to adapt your model (used your mode names to see if I understand it) 
but there must be an error, I don't get any output.

<xsl:stylesheet version="2.0" 
xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
  <xsl:output method="xml" encoding="UTF-8" omit-xml-declaration="yes"/>

  <xsl:template match="@*|node()" mode="phase-1">
    <xsl:copy>
      <xsl:apply-templates select="@*|node()"/>
    </xsl:copy>
  </xsl:template>

  <xsl:template match="acronym" mode="phase-1">
    <xsl:value-of select="@text"/>
  </xsl:template>

  <xsl:template match="/" mode="phase-2">
    <p>
      <xsl:value-of select="/file/content/para"/>
    </p>
  </xsl:template>

  <xsl:variable name="phase-1-output">
    <xsl:apply-templates select="/" mode="phase-1"/>
  </xsl:variable>

  <xsl:variable name="phase-2-output">
    <xsl:apply-templates select="$phase-1-output" mode="phase-2"/>
  </xsl:variable>

  <xsl:template match="/">
    <xsl:apply-templates select="$phase-2-output" mode="phase-3"/>
  </xsl:template>

</xsl:stylesheet>

So it works like this:
1) template (match="/") pulls in result from $phase-2-output
2) $phase-2-output is build by applying phase-2 templates to $phase-1-output
3) $phase-1-output is build by applying phase-1 templates to root of document

Am I right?

O.