master.xml

<data>
  <target id="2">
    <foo>
      <baz></baz>
      <bar attr="test" foo="bar">baz</bar>
      <foo/>
    </foo>
    <bar>
      <test></test>
    </bar>
    <test>
            foo
            <bar/>
    </test>
  </target>
</data>

master.xsl

<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform" version="1.0">

  <xsl:output method="xml" indent="yes" />

  <xsl:template match="/">
    <xsl:apply-templates select="target | target[text()]" mode="nodetostring"/>
  </xsl:template>
  
        <!--
         Converts a nodeset to string, especially useful for json conversions.

         ===================================================================================

         Copyright 2011, Thomas Appel, http://thomas-appel.com, mail(at)thomas-appel.com
         dual licensed under MIT and GPL license
         http://dev.thomas-appel.com/licenses/mit.txt
         http://dev.thomas-appel.com/licenses/gpl.txt

         ===================================================================================

         Example usage:

         (convert a exsl nodeset to string: )
         ___

         <xsl:variable name="somelink">
             <a href="{url}" class="some-class"><xsl:value-of select="name"/></a>
         </xsl:variable>
         <xsl:apply-templates select="exsl:node-set($somelink)/* | exsl:node-set($some-link)/text()"/>
         ___

         (convert xml noset to string: )
         ___

         <xsl:apply-templates select="node | node[text()]"/>
         ___

         Format result
         ___

         <xsl:apply-templates select="node | node[text()]">
             <xsl:with-param name="format" select="true()"/>
         </xsl:apply-templates>

     -->

        <xsl:template match="* | text()" mode="nodetostring">
            <xsl:param name="format" select="false()"/>
            <xsl:param name="format-tab" select="'&#09;'"/>

            <xsl:choose>
                <xsl:when test="boolean(name())">
                    <xsl:variable name="empty"/>

                    <xsl:choose>

                        <!--
                             if element has children
                        -->
                        <xsl:when test="*">
                            <xsl:if test="$format">
                                <xsl:apply-templates select="ancestor::*[1]" mode="nodetostring-format">
                                    <xsl:with-param name="format-tab" select="$format-tab"/>
                                </xsl:apply-templates>
                            </xsl:if>

                            <xsl:apply-templates select="." mode="nodetostring-opentag"/>

                            <xsl:if test="$format">
                                <xsl:text>&#10;</xsl:text>
                            </xsl:if>

                            <xsl:apply-templates select="*" mode="nodetostring">
                                <xsl:with-param name="format" select="$format"/>
                            </xsl:apply-templates>

                            <xsl:if test="$format">
                                <xsl:apply-templates select="ancestor::*[1]" mode="nodetostring-format">
                                    <xsl:with-param name="format-tab" select="$format-tab"/>
                                </xsl:apply-templates>
                            </xsl:if>

                            <xsl:apply-templates select="." mode="nodetostring-closetag"/>
                        </xsl:when>

                        <!--
                             if element has text
                        -->
                        <xsl:when test="normalize-space(.) != $empty">
                            <xsl:if test="$format">
                                <xsl:apply-templates select="ancestor::*[1]" mode="nodetostring-format">
                                    <xsl:with-param name="format-tab" select="$format-tab"/>
                                </xsl:apply-templates>
                            </xsl:if>

                            <xsl:apply-templates select="." mode="nodetostring-opentag"/>

                            <xsl:apply-templates select="text()" mode="nodetostring">
                                <xsl:with-param name="format" select="$format"/>
                            </xsl:apply-templates>

                            <xsl:apply-templates select="." mode="nodetostring-closetag"/>
                        </xsl:when>

                        <!--
                             assuming empty tags are self closing, e.g. <img/>, <source/>, <input/>
                        -->
                        <xsl:otherwise>
                            <xsl:if test="$format">
                                <xsl:apply-templates select="ancestor::*[1]" mode="nodetostring-format">
                                    <xsl:with-param name="format-tab" select="$format-tab"/>
                                </xsl:apply-templates>
                            </xsl:if>

                            <xsl:apply-templates select="." mode="nodetostring-selfclosetag"/>
                        </xsl:otherwise>
                    </xsl:choose>
                </xsl:when>
                <xsl:otherwise>
                    <xsl:value-of select="."/>
                </xsl:otherwise>
            </xsl:choose>

            <xsl:if test="$format">
                <xsl:text>&#10;</xsl:text>
            </xsl:if>
        </xsl:template>


        <xsl:template match="*" mode="nodetostring-selfclosetag">
            <xsl:text>&lt;</xsl:text>
            <xsl:value-of select="name()"/>
            <xsl:apply-templates select="@*" mode="nodetostring-attribs"/>
            <xsl:text>/&gt;</xsl:text>
        </xsl:template>


        <xsl:template match="*" mode="nodetostring-opentag">
            <xsl:text>&lt;</xsl:text>
            <xsl:value-of select="name()"/>
            <xsl:apply-templates select="@*" mode="nodetostring-attribs"/>
            <xsl:text>&gt;</xsl:text>
        </xsl:template>


        <xsl:template match="*" mode="nodetostring-closetag">
            <xsl:text>&lt;/</xsl:text>
            <xsl:value-of select="name()"/>
            <xsl:text>&gt;</xsl:text>
        </xsl:template>


        <xsl:template match="@*" mode="nodetostring-attribs">
            <xsl:value-of select="concat(' ', name(), '=', '&#34;', ., '&#34;')"/>
        </xsl:template>


        <xsl:template match="*" mode="nodetostring-format">
            <xsl:param name="format-tab"/>

            <xsl:value-of select="$format-tab"/>

            <xsl:apply-templates select="ancestor::*[1]" mode="nodetostring-format">
                <xsl:with-param name="format-tab" select="$format-tab"/>
            </xsl:apply-templates>
        </xsl:template>


    </xsl:stylesheet>


</xsl:stylesheet>