Hi Ian,
The problem is that we can't do (2) in _all_ cases, e.g. innerHTML on an <svg> can't possibly break out of the <svg> if it sees one of these tags, since that's the "root" of what is being parsed.
Yes, HTML has already lost the composability of parsing that XML and other languages have, that's long gone. But that doesn't mean we should try to make it even more irregular :)
Currently Firefox, Chrome, and Prince all treat the fragment case the same as the whole document case, so we already have interoperable behaviour on this issue.
Since the HTML spec is supposed to reflect reality, it seems pointless to deliberately introduce an inconsistency in the parsing model that requires changes in all user agents to implement.
Best regards, Michael -- Prince: Print with CSS! http://www.princexml.com
