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The status quo says the following things about XPath, formerly dealt with in bug 3673: 1) Schema authors can write any XPath 2.0 expressions they desire. 2) Schema processors are not allowed to report errors on any given XPath 2.0 expression. 3) Processors are required to support the minimum XPath 2.0 subset defined in the spec. 4) The spec allows only certain references using XPath; capacity exceeded errors may arise during assement. The WG has received repeated requests to revise #3 as #3': 3') Processors are required to support XPath 2.0.
A discussion proposal intended to serve the discussion of this topic and provide a possible final resolution is at http://www.w3.org/XML/Group/2004/06/xmlschema-1/structures.b5426.html (member-only lin)
The wording proposal mentioned in comment #1 was discussed and adopted by the WG at its call of 16 May. The editors were instructed to make three changes: (1) add constructors functions and casts to the minimal subset for CTA, (2) add a note warning that even with full XPath support, ancestors and descendants and siblings will not be accessible, as a result of the trimming of the tree during XDM instance construction, and (3) reformulate the rules which say, in effect, that the only function calls which fall into the minimal subset are those for fn:not (and the constructors for the built-ins). These changes have now been made and integrated into the status-quo document; I'm marking this issue as resolved. David, as the originator of record, I'll leave it to you to close it, if you are satisfied with its resolution.