#!/usr/bin/perl -w
use XML::Twig;

XML::Twig->new( twig_handlers => { _all_ => \&replace_text, },
                keep_spaces => 1, # to keep the original indentation
              )
         ->parse( \*DATA)
         ->flush;

sub replace_text
  { my( $t, $elt)= @_;
    # need to go through all pcdata elements in case thedoc
    # includes mixed content (last foo element in the example)
    foreach my $pcdata ($t->descendants( '#PCDATA'))
      { $pcdata->set_pcdata( my_filter( $pcdata->pcdata) ); }
    $t->flush;
  }

sub my_filter
  { $_[0]=~ s{foo}{bar}g; return $_[0]; }

__DATA__
<doc>
  <foo att="foo">foo foo baz</foo>
  <foo att="foo"/>
  <foo att="baz">foo foo baz</foo>
  <foo att="baz">foo <elt>bar foo</elt> foo baz</foo>
</doc>