The first paragraph of section 5 reads:

"The XML output method serializes the normalized sequence as an XML entity 
that MUST satisfy the rules for either a well-formed XML document entity or a 
well-formed XML external general parsed entity, or both.  A serialization 
error [err:SERE0003] results if the serializer is unable to satisfy those 
rules, except for content modified by the character expansion phase of 
serialization, as described in 4 Phases of Serialization, which could result 
in the serialized output being not well-formed but will not result in a 
serialization error. If a serialization error results, the serializer MUST 
signal the error."

This second sentence should be rephrased.

original comment raised in the members mailing list by Michael Kay:
http://lists.w3.org/Archives/Member/w3c-query-editors/2005Oct/0010.html


Suggested resolution:  

A serialization error [err:SERE0003] results if the serializer is unable to 
satisfy those rules, except for content modified by the character expansion 
phase of serialization, as described in 4 Phases of Serialization.   The 
effects of the character expansion phase could result in the serialized output 
being not well-formed, but will not result in a serialization error.  If a 
serialization error results, the serializer MUST signal the error.