Example of recursive text replace based on lookup data

gistfile1.txt

<?xml version="1.0" encoding="UTF-8"?>
<document>
    <people><person name="John" id="john"/><person name="Mary" id="mary"/></people>
    <text>Hello John, say hi to Mary</text>
</document>

multireplace.xslt

<?xml version="1.0" encoding="UTF-8"?>
<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
    xmlns:xs="http://www.w3.org/2001/XMLSchema"
    xmlns:local="local"
    exclude-result-prefixes="xs"
    version="3.0">
    
    <xsl:variable name="root" select="/document"/>
    
    <xsl:function name="local:replace2" as="xs:string*">
        <xsl:param name="text" as="xs:string"/>
        <xsl:param name="persons" as="item()*"/>        
        <xsl:variable name="person" select="head($persons/@name)"/>        
        <xsl:variable name="replaced" select="replace($text,$person,upper-case($person))"/> 
        <xsl:choose>
            <xsl:when test="empty($persons)"><xsl:value-of select="$text"/></xsl:when>
            <xsl:otherwise><xsl:value-of select="local:replace2($replaced,tail($persons))"/></xsl:otherwise>    
        </xsl:choose>               
    </xsl:function>
            
<xsl:template match="/ | @* | node()">
    <xsl:copy>
        <xsl:apply-templates select="@* | node()" />
    </xsl:copy>
</xsl:template>
    
 <xsl:template match="text"><xsl:copy-of select="local:replace2(.,$root/people/person)"></xsl:copy-of></xsl:template>
    
</xsl:stylesheet>

output.txt

<?xml version="1.0" encoding="UTF-8"?><document>
    <people><person name="John" id="john"/><person name="Mary" id="mary"/></people>
    Hello JOHN, say hi to MARY
</document>