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Our usecase is this :
1. There would be some BPEL template files in XML with some placeholders for runtime parameters and XQuery FLWR expressions.
2. At runtime, from Java, we would like to substitute those placeholders by runtime parameter values - would like to use the XQuery Java APIs to do that - see something similar available in Saxon XQuery parser.
Is it possible from Java using Oracle technology?
As Geoff posted , this use case is supported in XML Query Service which is a Pure Java middle tier solution.
It is also integrated with Oracle BPEL Process manager , that means you can invoke an XQuery within your BPEL process.
This feature is available in the upcoming version Oracle SOA Suite 10.1.3.1 which is already available as a Developer Preview