I really like the compactness of FP, thanks for posting this solution.
 I have a couple of questions:

A: <xsl:text/>

What is the purpose of a closed xsl:text?

B: I don't see "str-zipWith.xsl" in FXSL ... at least not my copy (1.0
and 2.0 both)

C: ($arg1 = $arg2) +1

This obviously includes/excluedes the asterisk based on equality, but
I don't know XSLT enough to understand it.  How do you add 1 to a
boolean?  Is it like in C where true==0 and false==1 (or anything but
0)?  Actually, for this to work true==1 and false==0?

Thanks.