Thanks for your thoughtful response. I really appreciate you taking the time.
It does seem that the font may lack a non-breaking hyphen (I'm surprised, it's fairly recent Adobe Original) but I'm not seeing any errors reported. Sorry to say, I can't figure out how the character is encoded in the xml—can you fill me in on that? It doesn't seen to be unicode or html encoding. (The string "2011" doesn't seem to appear except for a line number.)
The instructors at the camp want the students to works with "original" spelling and formatting conventions, and this version retains all that.(Is it worth it? Not my call.) Most other online versions are "cleaned up."
As it happens, in the end the very slow process did allow me to recover most of the formatting I wanted, with the exception of the italics, which I applied with search and replace and manually. So, the immediate task is accomplished.
As to my step by step: after looking a bit at the tags in the XML, and guessing at their meaning, I created a blank InD doc, and built the styles I wanted. Then I imported the XML, and assigned styles to the tags I had identified as likely to be germane. And then I waited. When the app returned, I flowed the test into the doc.
It does seem as if the this whole XSL thing would be good to know for the future, though. I will stare again at those links.
It does seem that the font may lack a non-breaking hyphen (I'm surprised, it's fairly recent Adobe Original) but I'm not seeing any errors reported. Sorry to say, I can't figure out how the character is encoded in the xml—can you fill me in on that? It doesn't seen to be unicode or html encoding.
Well, the XML file says that it's in UTF-8 encoding, right? I have my install of Notepad++ set up to use a font that clearly doesn't support the non-breaking hyphen:

Support for the non-breaking hyphen is not really common. But after some further testing I'm finding that, when I have Kis VF activated, this missing glyph isn't actually dropping. I believe that InDesign is substituting the normal hyphen-minus glyph and then treating it as if it has No Break applied. So, a missing glyph is not likely as the cause for your hour-long wait.
And then I waited. When the app returned, I flowed the test into the doc.
Glad to hear that it worked in the end. I have some speculations as to why it is that this particular weirdo flavor of XML causes InDesign to choke, but if you managed to flow your text in successfully it doesn't seem like it's worth pursuing unless some Shakespeare scholar shows up here with similar issues.