If you're taking the SAX output of Xalan, that's working as designed.

The SAX stream has to be well-formed XML, so the request to disable output
escaping is passed through as a Processing Instruction "hint" to the
serializer. Our serializers recognize that hint and act on it.... but if
you take the stream before it gets to them, it becomes your responsibility
to either act on that PI or preserve it until you're ready to pass it to
our serializers.

______________________________________
Joe Kesselman  / IBM Research


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