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In 3.2.2 upd:applyUpdates, the step that does revalidation precedes the step that checks whether the result violates any constraints of the Data Model. Thus, the argument to upd:revalidate might be an object that violates those constraints. But presumably it's meaningless to do revalidation on such an object. So perhaps the order of those two steps should be swapped.
Michael, On 13 Nov. 2007 the working group discussed and agreed with your proposed change, and it has been applied to the working draft. Since you were present at the discussion, I am marking this bug report as Fixed and Closed. Regards, Don Chamberlin (for the Query Working Group)