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The spec of resolve-uri() includes the non-normative note: If $relative is the zero-length string, returns the value of the base-uri property from the static context in the first form (if the base-uri property is not initialized in the static context an error is raised [err:FONS0005]) and $base in the second form. I think the last part of this (the second form) is true only if $base is an absolute URI. We've rather avoided saying what the result of resolving against a relative URI should be, because the RFCs themselves are not very explicit on the point. The author of test fn-resolve-uri-2 has his own theories... I propose removing the first paragraph of the Note.
On the Jan 17 joint WG telcon, the WGs agreed to make the change suggested by Michael Kay.