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QT approved comment: In 2.6.1.2, it's not clear whether the first paragraph is contributing anything useful. [Perhaps it's just the editor telling us how widely-read he is?] If the reader is going to follow the reference to ISO 11404, you need to tell them why it's relevant.
On the telcon: we will resolve issue 3231 by removing the first paragraph of section 2.6.1.2 So, we accept the comment as written, and will remove the paragraph.
This change (the deletion of the offending paragraph) has now been reflected in the status-quo version of the specification at http://www.w3.org/XML/Group/2004/06/xmlschema-2/datatypes.diff-1.0.html (member-only link). Accordingly, I'm closing this issue. If the QT WG would consider whether this change resolves the issue, and indicate assent by closing the issue, or dissent by reopening it, we'd be grateful. If we don't hear one way or the other by a week or so after the October face to face meetings, we'll assume that silence betokens consent, and close it ourselves.