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"operates as specified, given ShadowRoot as the context object." This ain't right. ShadowRoot would make a terrible parsing context object. What we need instead is assume no context.
Shouldn’t the host provide the parsing context?
(In reply to comment #1) > Shouldn’t the host provide the parsing context? Suppose there's a shadow subree on a div, which is supposed to go into a shadow insertion point inside of a table. Looking at the host, the innerHTML assume "in-body" and ignore the in-table tokens.
http://dvcs.w3.org/hg/webcomponents/rev/b8d310e75809 I changed the context to host, since we don't yet have a spec with no context that I can refer to.