Garret Wilson wrote:
> * Use "application/xml-external-parsed-entity" and wrap the fragment in 
> an outer element.

No, you don't need to wrap it in an outer element if you used that MIME 
type.  See the definition of an external parsed entity in the XML rec 
[1].  The example you provided "this is <em>really</em> cool" is 
perfectly well-formed as-is.

http://www.w3.org/TR/REC-xml/#NT-extParsedEnt 

-- 
Lachlan Hunt
http://lachy.id.au/