Your step #1 was the ticket! Thanks AM. I was not first constructing a new text node.

The simple fix: 
  $parentnode = $node -> parentNode;
  $txtnode = XML::LibXML::Text ->new($tmtext);
  $node = $parentnode -> replaceChild($txtnode, $node);

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In reply to Re^2: Replacing an XPath node with the value of its content by stylechief
in thread Replacing an XPath node with the value of its content by stylechief

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