> I think that, as per XSLT 3.0 spec, the child content model of
xsl:matching-substring / xsl:non-matching-substring is a sequence constructor,
which would not allow xsl:analyze-string to return an atomic value (except in
a case, when the returned sequence's size is one).
>

No, that's not correct. A sequence constructor can return anything. For
example if the sequence constructor is

<xsl:sequence select="1 to 5"/>

then the value is a sequence of five integers. The containing instruction
might turn this into something else (e.g. a text node), but most instructions,
like xsl:choose or xsl:analyze-string, will leave it untouched.

Michael Kay
Saxonica