This looks good, however in reality none of the current parser implementations support that ! For example, Xerces (implemented in jaxp 1.3 & 1.4) only supports xpointer="element(...)". This makes it almost useless, unless a whole tree has to be included. It is not possible to easily merge two xml files this way.
Frédéric Laurent already noticed this 3 years ago... It's time for a Java expert to implement it in Xerces !