If I understand your question properly, here is what I would do...

#!/usr/bin/perl

use strict;

while (<DATA>) {
    if (/^\<differentiation\>/ ... /^\<\/differentiation\>/ ) {
        s/\<.*\>/new/g if ! ( /\<differentiation\>/ || /\<\/differenti
+ation\>/ );
        print;
    }
}

__DATA__
<differentiation>
<differentiated-content differentiation="Emphasis3" xlink:type="simple
+">Dedication</differentiated-content>
</differentiation>
<differentiation>
<para differentiation="Emphasis3" xlink:type="simple">Dedication</para
+>
</differentiation>
[download]