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Ad c) -- you can create attributes with localized content using technique described in article. E.g.:
<lnk title="Click here to go to the main section">
<xsl:attribute name="href">
<xsl:text>#</xsl:text>
<msg:main/>
</xsl:attribute>
Go back
</lnk>
Regarding your proposal. I dont think that it is good idea to use non-XML syntax for marking up localized text (curly braces in your case). This will prevent you from using XML tools (including XSLT) to manage and process localized content.
But if you will replace curly braces with some purely XML based syntax you can quite easily implement everything you need.
Another possibility is to create stylesheet that will extract text to localize into PO file for gettext and then use custom XSLT extension function to call gettext to translate strings on the fly.
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