Just point to the content:

<doc xmlns:xi="http://www.w3.org/2001/XInclude">
<string id="cde">Center for Document Engineering</string>
<title>Where I Work</title>
<p>I teach at the <xi:include xpointer="id('cde')"/>.</p>
</doc>

So you get:

<doc xmlns:xi="http://www.w3.org/2001/XInclude">
<string id="cde">Center for Document Engineering</string>
<title>Where I Work</title>
<p>I teach at the Center for Document Engineering.</p>
</doc>