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Various suggestions are made, including: - using the word "resolved" instead of "dereferenced" in the text that states "...the entity will be dereferenced before schema validation." - rewriting the "city" element so that the empty element tag is not used. See the following for more information: http://lists.w3.org/Archives/Public/www-xml-schema-comments/2001JulSep/0145.html
Proposed erratum available at: http://lists.w3.org/Archives/Member/w3c-xml-schema-ig/2002Aug/0010.html The first 2 changes in the erratum were approved at the Sept. 13 concall Erratum E0-27 added.