Compile and run the following class:

---%<---
import java.io.StringReader;
import javax.xml.parsers.DocumentBuilderFactory;
import javax.xml.transform.OutputKeys;
import javax.xml.transform.Transformer;
import javax.xml.transform.TransformerFactory;
import javax.xml.transform.dom.DOMSource;
import javax.xml.transform.stream.StreamResult;
import javax.xml.transform.stream.StreamSource;
import org.w3c.dom.Document;
import org.xml.sax.InputSource;
public class TestNestedNamespaces {
    public static void main(String[] args) throws Exception {
        Transformer t1 = TransformerFactory.newInstance().newTransformer();
        t1.setOutputProperty(OutputKeys.INDENT, "yes");
        t1.setOutputProperty("{http://xml.apache.org/xslt}indent-amount", "4");
        String xslt =
                "<xsl:stylesheet version='1.0' " +
                "xmlns:xsl='http://www.w3.org/1999/XSL/Transform&#39; " +
                "xmlns:xalan='http://xml.apache.org/xslt&#39; " +
                "exclude-result-prefixes='xalan'>" +
                "<xsl:output method='xml' indent='yes' xalan:indent-amount='4'/>" +
                "<xsl:template match='@*|node()'>" +
                "<xsl:copy>" +
                "<xsl:apply-templates select='@*|node()'/>" +
                "</xsl:copy>" +
                "</xsl:template>" +
                "</xsl:stylesheet>";
        Transformer t2 = TransformerFactory.newInstance().newTransformer(new StreamSource(new StringReader(xslt)));
        DocumentBuilderFactory factory = DocumentBuilderFactory.newInstance();
        factory.setNamespaceAware(true);
        Document doc = factory.newDocumentBuilder().getDOMImplementation().createDocument("urn:root", "root", null);
        doc.getDocumentElement().appendChild(doc.createElementNS("urn:child", "child"));
        t1.transform(new DOMSource(doc), new StreamResult(System.out));
        t2.transform(new DOMSource(doc), new StreamResult(System.out));
        String xml = "<root xmlns='urn:root'/>";
        doc = factory.newDocumentBuilder().parse(new InputSource(new StringReader(xml)));
        doc.getDocumentElement().appendChild(doc.createElementNS("urn:child", "child"));
        t1.transform(new DOMSource(doc), new StreamResult(System.out));
        t2.transform(new DOMSource(doc), new StreamResult(System.out));
    }
}
---%<---

When run under JDK 1.5 (or 1.6) it works OK:

---%<---
java version "1.5.0_04"
Java(TM) 2 Runtime Environment, Standard Edition (build 1.5.0_04-b05)
Java HotSpot(TM) Client VM (build 1.5.0_04-b05, mixed mode, sharing)

<?xml version="1.0" encoding="UTF-8"?>
<root xmlns="urn:root">
<child xmlns="urn:child"/>
</root>
<?xml version="1.0" encoding="UTF-8"?>
<root xmlns="urn:root">
    <child xmlns="urn:child"/>
</root>
<?xml version="1.0" encoding="UTF-8"?>
<root xmlns="urn:root">
<child xmlns="urn:child"/>
</root>
<?xml version="1.0" encoding="UTF-8"?>
<root xmlns="urn:root">
    <child xmlns="urn:child"/>
</root>
---%<---

But under JDK 1.4 the output is mangled in various ways, depending both on how you created the document, and how you serialized it:

---%<---
java version "1.4.2_08"
Java(TM) 2 Runtime Environment, Standard Edition (build 1.4.2_08-b03)
Java HotSpot(TM) Client VM (build 1.4.2_08-b03, mixed mode)

<?xml version="1.0" encoding="UTF-8"?>
<root>
    <child/>
</root>
<?xml version="1.0" encoding="UTF-8"?>
<root xmlns="urn:root">
    <child xmlns="urn:child"/>
</root>
<?xml version="1.0" encoding="UTF-8"?>
<root xmlns="urn:root">
    <child/>
</root>
<?xml version="1.0" encoding="UTF-8"?>
<root xmlns="urn:root">
    <child xmlns="urn:root"/>
</root>
---%<---

Note that the output is only correct in the case that you created the document in-memory (not from parsing), *and* serialized it using an explicit stylesheet (not the default identity transformation).