Currently it isn't clear how <element> behaves when it is dynamically inserted into the tree by a script.
But it should be aware of that.

Here is why:
I'm trying to describe coming Web Components "packaging" feature in terms of 
XHR and <element> tree implantation, from the XHR.response document to the host document. 
i.e. We can explain packaging by moving <element> nodes from XHR document to the host document,
which should (IMO) trigger a series of custom element instantiation.

For make this happen, we need to clarify it.