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We use "Char" as a nonterminal meaning "normal character" in the RE appendix productions (and defined therein). We also refer to the nonterminal "Char" in the production defining the lexical space of string, and there it is the nonterminal defined in the XML spec, referring to a different set of characters. It's at best questionable whether we should use two distinct nonterminals with the same spelling. Since we have no control over the nonterminal defined in the XML spec, I suggest we change the name of the one in the appendix, e.g. to "normChar".
A wording proposal intended to resolve this issue among others was sent to the WG 27 February 2008: http://www.w3.org/XML/Group/2004/06/xmlschema-2/datatypes.omni200802.xml (member-only link).
At its telcon today, the XML Schema WG adopted the wording proposal at http://www.w3.org/XML/Group/2004/06/xmlschema-2/datatypes.omni200802.xml (member-only link), and believes this issue now to be resolved. Since the originator is a WG member and was present on the call, it seems likely that you agree that the issue is successfully resolved. Still, please so indicate by changing the status of the bug report to CLOSED. Or reopen it if you discover a snag. Silence will be taken to mean consent.