This comes up all the time, most recently.
http://biglist.com/lists/xsl-list/archives/200610/msg00744.html
As Wendell said in XSLT2 you'd use xsl-for-each-group (and I usually use
the xslt1 analogue, muenchian grouping, to do this in XSLT1).
An alternative is to view the need to lift the lists out of the
paragraphs as just due to html <p>'s half baked content model and
instead translate your paragraphs into <div> which in many ways is just
p with a fixed content model.
<p>This is some text. <ul><li>List item.</li></ul> <strong>This is
strong text.</strong> Also, normal text.</p>
is invalid (x)html and translating it to
<p>This is some text.</p>
<ul><li>List item.</li></ul>
<p><strong>This is strong text.</strong> Also, normal text.</p>
makes it valid but at the expense of destroying the paragraph (and in
some cases, sentence) structure of your document.
<div class="p">This is some text. <ul><li>List item.</li></ul> <strong>This is
strong text.</strong> Also, normal text.</div>
is valid though and with a bit of css on div.p to style it as a
paragraph, you are done.
David
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