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I think "default phase" might have something to do with default handling, but I'm not sure. If it is about default handling[1] "The event must not be retargeted during the default phase of event dispatch." is probably wrong. Event re-retargeting should probably happen also when doing default handling. (That is at least what XBL1 does) [1] (which is btw something browser do have as a last phase usually, but HTML spec requires something quite different. Don't know why)
I think I should just remove this stuff from the spec. Default event handling is just an implementation detail. WDYT?
Retitling to better reflect where it belongs. BTW, there's a convenient "File a bug" button on the spec, to set up the blocking bug and title prefix for you :)
http://dvcs.w3.org/hg/webcomponents/rev/b7fa1f5126b1