Either I am doing something the wrong way, or it isn't that simple. See the example and its output.
Hans van der Meer
% failure to typeset attribute.
\startxmlsetups demo:texatt
\xmlsetsetup{#1}{root|node}{demo:texatt:*}
\stopxmlsetups
\xmlregisterdocumentsetup{demo}{demo:texatt}
\startxmlsetups demo:texatt:root
\xmlflush{#1}
\stopxmlsetups
\startxmlsetups demo:texatt:node
node: attribute textstyle = \xmlchainatt{#1}{textstyle}\crlf
now use \tex{it}:
{\starttexcode
\xmlchainatt{#1}{textstyle}"should be italic"
\stoptexcode
}\crlf
\stopxmlsetups
\startbuffer[texatt]
<root textstyle="\it">
<node/>
</root>
\stopbuffer
\starttext
\xmlprocessbuffer{demo}{texatt}{}
\stoptext