xquery version "1.0";

declare function local:encrypt($node){
  'an encrypted value'
};

declare function local:decrypt($node){
  'a decrypted value'
};


declare function local:traverse-and-encrypt($nodes as node()*) as node()*{
  for $n in $nodes
  return if($n/@encrypted = 'true')
    then element{fn:node-name($n)}{
      for $a in $n/@*
        return if(fn:local-name($a) = 'encrypted')
          then attribute {'encrypted'} {'false'}
          else $a,
      local:decrypt($n/text())
    }
    else if($n/@encrypted = 'false')
      then element{fn:node-name($n)}{
        for $a in $n/@*
          return if(fn:local-name($a) = 'encrypted')
            then attribute {'encrypted'} {'true'}
            else $a,
        local:encrypt($n/text())
      }
      else element{fn:node-name($n)}{
        $n/@*,
        $n/text(),
        for $child in $n/*
          return local:traverse-and-encrypt($child)
      }
};

let $doc :=
<books>
  <book>
    <title encrypted="true">0234534rdf;skdlfsd</title>
    <author>J K. Rowling</author>
    <year>2005</year>
    <price>29.99</price>
  </book>
  <book>
    <title encrypted="false">Another book</title>
    <author test='testing attributes'>J K. Rowling</author>
    <year>2005</year>
    <price>29.99</price>
  </book>
</books>

return local:traverse-and-encrypt($doc)

<books>
    <book>
        <title encrypted="false">a decrypted value</title>
        <author>J K. Rowling</author>
         <year>2005</year>
        <price>29.99</price>
    </book>
    <book>
       <title encrypted="true">an encrypted value</title>
       <author test="testing attributes">J K. Rowling</author>
       <year>2005</year>
       <price>29.99</price>
       </book>
</books>