I've always had problems with 'tag minimisation' and html, such as:
<div>I dont want to be indented</div>
If something is empty the first div becomes <div/> which html doesn't
recognise as a closed element, so all following elements get the
The same goes for <span>, <a>, <td> etc.
The only way to stop the minimisation is a liberal use of #160's, or
whatever meets your output encoding ;)
Of course, a nice feature to a processor would be a switch to stop it
something like <exsl:output minimisation="no"/>, at least until html
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