To run this, download the gist, and from the commandline type `ruby [path/to/the/gist.rb]` You should make sure you have Ruby and nokogiri installed on your computer first. N.B. just realized that the download gist link saves a zipped file that you will have to unzip to get to the xml_transformation.rb file.

result.xml

<state name="Alabama">
  <city name="Abbeville" number="1"/>
  <city name="Adamsville" number="1"/>
  <city name="Addison" number="1"/>
  <city name="Akron" number="2"/>
</state>

xml_transformation.rb

require 'nokogiri'

# note that the states are wrapped inside <doc> tags.
# nokogiri prefers dealing with just one top level node.
text = <<-XML
<doc>
  <state>
    <name>Alabama</name>
    <city>Abbeville</city>
    <number>1</number>
  </state>
  <state>
    <name>Alabama</name>
    <city>Adamsville</city>
    <number>1</number>
  </state>
  <state>
    <name>Alabama</name>
    <city>Addison</city>
    <number>1</number>
  </state>
  <state>
    <name>Alabama</name>
    <city>Akron</city>
    <number>2</number>
  </state>
</doc>
XML

# parse the text into XML
xml = Nokogiri::XML(text)

# this is where we're storing the states
states = {}

# find all of the state nodes, and loop over them
xml.css('state').each do |state|
  # get all of the pieces of text we care about.
  state_name = state.css('name').text
  city_name  = state.css('city').text
  number     = state.css('number').text
  
  # ensure that each state_name is stored as a hash in `states`
  # this uses ruby's conditional operator. it'd be equivalent to saying
  # states[state_name] = states[state_name] || {}
  # or
  # states[state_name] = {} unless states[state_name]
  states[state_name] ||= {}
  states[state_name][city_name] = number # assign each city it's number.
end

# If you wanted to work with the states in ruby, you could just stop here.
# The code below is just to output some XML.
# In general, if you've parsed some XML and extracted the data you want
# it's often easier just to work with the data you've extracted
# rather than stuffing it back into XML format.

# loop over all the states we have extracted
output = states.map do |state_name, cities|
  # generate a list of xml strings for each city
  # and merge them all together into one string.
  city_string = cities.map do |city_name, number| 
    "  <city name=\"#{city_name}\" number=\"#{number}\"/>"
  end.join("\n")
  
  # stick the merged xml we made for the cities into
  # a state node.
  "<state name=\"#{state_name}\">\n#{city_string}\n</state>"
end

# print the output.
puts output