I'm currently working on some system tools to browse the code, develop full coverage tests and help refactor the code for the FOLD application. Part of this suite is an XQuery unit test tool. As an experiment, I've combined the two and put up a simple demo on our public eXist demo server.
The function is defined in the prolog which is prepended to each test before execution. The result can be either text or a node which is compared with the expected result as strings or with deep-equal respectively.
The test scripts themselves, viewed as XML look a bit of a mess but the source shows the formatting. CDATA sections are now preserved in stored files in eXist which is convenient when round-tripping XQuery code containing XML, but is controversial since CDATA is only intended to encode XML characters on input but is not part of the infomodel.