XSLT parse escaped HTML stored in an attribute and convert that attribute's content into element's content

Answer 1

Disable output escaping on the copy-of, i.e. <xsl:copy-of select="expression" disable-output-escaping="yes" />

Answer 2

I would recommend using a dedicated template:

<!-- check if lower-casing @Type is really necessary -->
<xsl:template name="BookingComments[lower-case(@Type)='ram']/@comment">
  <p>
    <xsl:value-of select="." disable-output-escaping="yes" />
  </p>     
</xsl:template>

This way you could simply apply templates to the attribute. Note that disabling output escaping has the potential to generate ill-formed output.

Answer 3

You could bind an extension function parse() which parses a string into a nodeset. The exact mechanism will depend on your XSLT engine.

In Xalan, we can take the following static method:

public class MyExtension
{
    public static NodeIterator Parse( string xml );
}

and use it like so:

<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
    xmlns:java="http://xml.apache.org/xalan/java"
    exclude-result-prefixes="java"
    version="1.0">

    <xsl:template match="BookingComments">
        <xsl:copy-of select="java:package.name.MyExtension.Parse(string(@comment))" />
    </xsl:template>

</xsl:stylesheet>