Here is the latest development on the subject.
I communicated with Mukul Gandhi. He is a chief maintainer of the Xerces-J
XSD 1.1 project.
Please see below his reply with the good news.

>Hi Yitzhak,
>
>I'm well and hoping same for you.
>
>I could fix this bug, and the fix for this has been committed to Xerces-J's
XML Schema 1.1 dev repos branch at,
https://github.com/apache/xerces-j/tree/xml-schema-1.1-dev.
>
>I've also created a jira issue for this at,
https://issues.apache.org/jira/browse/XERCESJ-1765.
>
>If you wish, you may build and use Xerces-J's XML Schema 1.1 implementation
from repos url cited above.
>
>--
>Regards,
>Mukul Gandhi


Regards,
Yitzhak Khabinsky


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