The snippet you have posted is not even well-formed XML, the MyObject start tag lacks a > so instead of what you have posted you need
<MyObject objectInformation="<node1><node2>some Information here</node2><node3><![CDATA[<TEXTFORMAT LEADING="2"><P ALIGN="LEFT"><FONT FACE="Verdana" SIZE="11" COLOR="#403F3F" LETTERSPACING="0" KERNING="0"><B><I>comment in for new object</I></B></FONT></P></TEXTFORMAT>]]></node3><node4>07/18/2013</node4></node1>"></MyObject>
As for processing that with a commercial version of Saxon 9 where XSLT has access to the extension function saxon:parse (or the XSLT/XPath 3.0 parse-xml) I think it should work but you need to use it twice, once one the value of the objectInformation attribute of the MyObject element, then on the value of the node3 element so code would do e.g.
<xsl:template match="MyObject">
<xsl:apply-templates select="saxon:parse(@objectInformation)/node()"/>
</xsl:template>
<xsl:template match="node3">
<xsl:apply-templates select="saxon:parse(.)/node()"/>
</xsl:template>
<xsl:template match="TEXTFORMAT">
<!-- now create or transform the elements as needed -->
</xsl:template>
To give you a more complete example, when I apply the stylesheet
<xsl:stylesheet
xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
xmlns:fo="http://www.w3.org/1999/XSL/Format"
xmlns:saxon="http://saxon.sf.net/"
exclude-result-prefixes="saxon"
version="2.0">
<xsl:output method="xml" indent="yes"/>
<xsl:template match="MyObject">
<xsl:apply-templates select="saxon:parse(@objectInformation)/node()"/>
</xsl:template>
<xsl:template match="node3">
<xsl:apply-templates select="saxon:parse(.)/node()"/>
</xsl:template>
<xsl:template match="TEXTFORMAT">
<fo:block>
<xsl:apply-templates/>
</fo:block>
</xsl:template>
<xsl:template match="P">
<fo:block>
<xsl:apply-templates/>
</fo:block>
</xsl:template>
</xsl:stylesheet>
to the input
<MyObject objectInformation="<node1><node2>some Information here</node2><node3><![CDATA[<TEXTFORMAT LEADING="2"><P ALIGN="LEFT"><FONT FACE="Verdana" SIZE="11" COLOR="#403F3F" LETTERSPACING="0" KERNING="0"><B><I>comment in for new object</I></B></FONT></P></TEXTFORMAT>]]></node3><node4>07/18/2013</node4></node1>"></MyObject>
with Saxon 9.1.0.8 (latest open source version of Saxon 9 to support saxon:parse) I get the result
<?xml version="1.0" encoding="UTF-8"?>some Information here<fo:block xmlns:fo="http://www.w3.org/1999/XSL/Format">
<fo:block>comment in for new object</fo:block>
</fo:block>07/18/2013
I realize that is not a complete and valid XSL-FO document but it shows that the templates for the elements that are escaped in the input and then parsed via saxon:parse are called. So you simply need to add further templates to transform the other elements as needed and to create a valid XSL-FO document, if you need help on that I suggest you ask a new question outlining which FO structure you want for the input elements once they have been parsed (i.e. how you want to transform those node elements and how those HTML elements), then hopefully someone who is more fluent with XSL-FO than I am can help out.
