Why error about adding an “attribute” after adding a “node” when the “copy” has the attribute wildcard first?

When running the below XSLT

<xsl:stylesheet version="2.0"
    xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
    xmlns:xquery="http://www.w3.org/2005/xpath-functions"
    xmlns:upd="http://www.w3.org/2007/xquery-update-10">

    <xsl:output method="xml" indent="yes"/>

    <xsl:template match="/">
        <xsl:for-each select="document('f1.xml')">
            <xsl:variable name="doc" select="."/>
            <xsl:variable name="newFileName" select="concat(substring-before(document-uri($doc), '.xml'), '_chg.xml')" />
            <xsl:result-document href="{$newFileName}">
                <xsl:apply-templates select="$doc/*"/>
            </xsl:result-document>
        </xsl:for-each>
    </xsl:template>

<!-- Template to match the root element -->
<xsl:template match="/">
    <xsl:apply-templates select="*"/>
</xsl:template>

<!-- Identity template to copy all nodes and attributes -->
<xsl:template match="@*|node()">
    <xsl:copy>
        <!-- Copy attributes first -->
        <xsl:apply-templates select="@*"/>
        <!-- Then copy child nodes -->
        <xsl:apply-templates select="node()"/>
    </xsl:copy>
</xsl:template>

</xsl:stylesheet>

The following error is produced.

XTDE0410: Cannot add attribute node to an element node that already has non attribute or namespace children

Why, the attributes are clearly copied before the nodes in the "copy" node.

Tried removing the node in the XML with the attributes listed in the error message, no change, just errors on the next node. Tried removing the iterations through the list of files, no change. Tried combining the "@*" and "node()" on the apply-templates

Sample XML

<?xml version="1.0" encoding="UTF-8"?>
<?xml-stylesheet type="text/xsl" href="file:///F:/temp%20(F)/2025-06-24a_debug/DataPower_Control_File_cleanup_actions_V3.xslt"?>
<registeredServices>
    <domain name="entsvcs" description="Enterprise Services">
        <service name="commonlogging" version="1.0" type="SOAP" endpoint="http://localhost:3016" sldpolicy="default_sld_policy">
            <registeredConsumers>
                <!--
                <consumer><consumerId></consumerId><consumerName></consumerName><clientName></clientName><slaPolicy>bcbst_default_sla_policy</slaPolicy><logLevel>0</logLevel>
                -->
                <!-- 0 = ALL, 1=DEBUG, 2=INFO, 3=WARN, 4=ERROR, 5=FATAL, 6=OFF -->
                <!--
                </consumer>
                -->
                <consumer>
                    <consumerId>bcbstesvcs</consumerId>
                    <consumerName>BCBST</consumerName>
                    <clientName>Enterprise Services</clientName>
                    <slaPolicy>bcbst_default_sla_policy</slaPolicy>
                    <logLevel>1</logLevel>
                </consumer>
            </registeredConsumers>
        </service>
    </domain>
</registeredServices>