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A Note in ยง27.4 says However, a software product may invoke an XSLT 2.0 processor in preference to an XSLT 3.0 processor when the stylesheet specifies version="3.0", in which case any use of new 3.0 constructs will be rejected. It surely meant to say ... when the stylesheet specifies version="2.0" ...
The change was agreed by the WG and has been applied.