ACTION-2295: Check that his implementation combined @instance and @targetref correctly

Here is what we do for instance replacement:

If we have `instance` only, we use that as the destination.

If `instance` is specified and not found, we dispatch an error.

If we have both `instance` and `targetref`, we evaluate `targetref` in the
context of the root element of the instance obtained.

This seems to follow the spec which says "except the context item is
modified to be the document element of the instance identified by the
`instance` attribute if present".

-Erik