<xsl:template name="replace-string">
    <xsl:param name="text"/>
    <xsl:param name="replace"/>
    <xsl:param name="with"/>
    <xsl:choose>
      <xsl:when test="contains($text,$replace)">
        <xsl:value-of select="substring-before($text,$replace)"/>
        <xsl:value-of select="$with"/>
        <xsl:call-template name="replace-string">
          <xsl:with-param name="text" select="substring-after($text,$replace)"/>
          <xsl:with-param name="replace" select="$replace"/>
          <xsl:with-param name="with" select="$with"/>
        </xsl:call-template>
      </xsl:when>
      <xsl:otherwise>
        <xsl:value-of select="$text"/>
      </xsl:otherwise>
    </xsl:choose>
  </xsl:template>

  <xsl:variable name="myString" select="'ABCDE'"/>
  <xsl:variable name="myNewString">
    <xsl:call-template name="replace-string">
      <xsl:with-param name="text" select="string($myString)"/>
      <xsl:with-param name="replace" select="'DE'"/>
      <xsl:with-param name="with" select="'FF'"/>
    </xsl:call-template>
  </xsl:variable>
  <xsl:variable name="myNewRealString" select="string($myNewString)"/>