A certain amount of one-step-forward-two-steps-back today. We've determined that there's no way with XEP to do small-caps, because the font does not have a small-caps variant, so I had to write some code to make small-caps programmatically with text analysis and styles. This caused horrible problems because it introduced lost of whitespace, due to the indenting between FO nodes. The only way to get rid of this was to set indent="no" on the XSL output, which leaves us with the need to manually insert spaces all over the place; that will take me a while, but ultimately it'll probably be the right thing to do. So the results are currently ugly as sin, but will eventually look a bit better.
Lots of other decisions as detailed in SMK's posts today.