The observations and solution to the above problem are:
After calling
domFragment=xsltProcessor.transformToFragment(xmlD ata,document)
the resulting dom fragment was inserted (appendChild()) into a 'span' node in the document. But, IE did not insert the <script> nodes. Instead, it made an array of all the script nodes in domFragment.scripts.
Hence, all the elements of domFragment.scripts also had to be inserted after domFragment was inserted. This solved the problem. The same thing was observed even in IE7
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