The text of this query is

fn:avg(( (xs:float("NaN"), xs:decimal("-999999999999999999") , "a", (), "3") ))

I believe that this can validly return "NaN", under the criteria for "errors and optimization": once you've established that there is only one possible non-error result (NaN in this case) you are allowed to exit early and return that result without evaluating more of the sequence to look for errors.