Re: RS/RE, again (sorry)
It seems to me that the best thing, if it is possible, would be
* the XML parser can pass all whitespace back to the application
* the distinction between data and whitespace is retained, so that it is
not an error to have whitespace in element content, even though that
whitespace is passed back to the application.
* RS and RE and space and tab and the places where comments were before
they were elided are all whitespace
It's important to be careful about what "significant" means.
 whether the parser discards it
 whether it is treated as #PCDATA
 whether it is recognised as S in a production
I do not suggest making all whitespace be PCDATA and losing the distinctioon
between whitespace and data.
Hence, I favour
3. Add language to the spec allowing the application to force the
processor to pass through all [whitespace] regardless of the -XML-SPACE
in conjunction with removing the -XML-SPACE setting.