What should text/html flavor conformance checkers say about <foo />?
Silently treat as <foo>> as per SGML?
Yes.
Silently treat as <foo> as per real world?
Intentionally buggy/broken behaviour should not be carried over into conformance checkers.
Report a warning?
Yes.
Report an error?
I don't think it should be an error. A warning like the WDG validator issues is appropriate.
What about <foo/>?
Same as <foo />.
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