JSF 2.0 and JSTL use of c:set tag to store some temporary data?

That's because taghandlers and UI components doesn't run at the same time. JSTL tags are taghandlers and they run during building the view (when the XHTML file is converted to JSF component tree). JSF h:xxx tags are UI components and they run during rendering the view (when the JSF component tree is converted/rendered to HTML code).

See also JSTL in JSF2 Facelets... makes sense?

Just making an educated guess, because I haven't tried to combine JSF and JSTL, but I believe the c:set would be handled before the h:outputText is rendered, so it would only see the static text in its body. I'm not sure what order tag handlers are called in relation to the JSF lifecycle but putting in some logging would clear that up.

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