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The table in section C.1, under "Default initial value", has "(not applicable when method = xml)" for both escape-uri-attributes and include-content-type. I'm not sure what the relevance of this phrase is to the default value. I think it should say something about how the default value is derived whether or not the method is xml. Maybe this is a vestige from a previous version of XQuery where the only possible method was xml?
For compatibility with XSLT 1.0, we will make the default 'yes' for both of these components.
At the teleconference on 2015-06-09, the WG agreed to resolve this bug in accordance with comment #1
Confirmed fixed in the current draft spec.