On 27/08/2012 17:19, Mike Sokolov wrote:
Somebody in my office told me they "fixed" a similar problem by using output method="xhtml".  Is it true that Saxon allows characters 128 - 159 in XHTML?

Yes (as do the W3C specs).

Another way to solve the problem is by using character maps. The fact is, when codepoints 128-159 appear in XML, they are almost invariably miscodings traceable to the use of these code points in windows-1252. For example, the chances are that 128 represents the Euro symbol, Unicode x20AC, so a character map containing

<xsl:output-character char="&#128;" string="&#x20AC;"/>

will correct the error.

Michael Kay