Many thanks to Martin Honnen for his response below. I add more comments
below (suspected bug in Saxon).
More likely to be a bug in the JDK parser. Try it using Apache Xerces, which is
much more reliable than the JDK parser. I think some of the long-standing bugs
in the JDK parser have finally been fixed in Java 8, so you could also try it
with a different JDK.
Michael Kay
Saxonica
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