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This is how it's implemented in Blink, and it's consistent with Element.innerHTML: https://dvcs.w3.org/hg/innerhtml/raw-file/tip/index.html#extensions-to-the-element-interface
Is there a bug on moving innerHTML to DocumentFragment? Or was there a problem with that? It seems this kind of infrastructure method should not be restricted to ShadowRoot.
For DocumentFragment there would be no context element. (ShadowRoot uses the host element.)
Moved to https://github.com/w3c/webcomponents/issues/74