I’ve updated Automatic transformation between XML documents with different namespaces specification.
The main difference of the last updated draft is that it supports running transformations on elements with namespaced attributes:
It can be used for example to process XLink attributes, as in this example:
<anchor xlink:type="simple" xlink:href="#someHeading">a link</anchor>
Note that the detailed example is not yet written and the specification is a rough draft.