The scope of an xsl:exclude-result-prefixes on literal result elements is incorrectly not restricted to the subtree, but to the whole tree in general.

7.1.1 Literal Result Elements:
"The designation of a namespace as an excluded namespace is effective within the subtree of the stylesheet rooted at the element bearing the exclude-result-prefixes or xsl:exclude-result-prefixes attribute"

The following example demonstrates than the ns-declaration on <boo> with the prefix "bar" is removed, although it is excluded not until deeper in the tree on <bar>.
(The fact that the resulting <foo> holds both ns-declarations is an other bug.)

"erp.xsl"
--------
<?xml version='1.0'?>
<xsl:stylesheet version="1.0"
    xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
  <xsl:template match="/">
    <foo>
      <boo xmlns:foo="urn:test:foo" xmlns:bar="urn:test:bar"
          xsl:exclude-result-prefixes="foo">
        <bar xmlns:foo="urn:test:foo" xmlns:bar="urn:test:bar"
	  xsl:exclude-result-prefixes="bar">
          <zoo xmlns:foo="urn:test:foo" xmlns:bar="urn:test:bar"/>
        </bar>
      </boo>
    </foo>
  </xsl:template>
</xsl:stylesheet>

type ..\test.xml
<?xml version="1.0"?>
<foo>zoo</foo>

xsltproc erp.xsd ..\test.xml
<?xml version="1.0"?>
<foo xmlns:bar="urn:test:bar" xmlns:foo="urn:test:foo"><boo><bar><zoo/></bar></boo></foo>