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The status quo is that whitespace stripping, as defined using xsl:strip-space, does not apply to documents constructed using fn:parse-xml or fn:parse-xml-fragment. We should say this more explicitly in the second para of section 4.5.
The change was accepted and has been applied. Also included the results of xsl:analyze-string and xsl:json-to-xml in the list (i.e. clarified that strip-space does not apply to these trees either).