implementors question: correct behavior of nested nodeset in repeat

seeking help understanding the following use case:

for an instance like this:
xforms:instance id="Test" >
<data xmlns="">
  <level id="1">
   <item>Item 1-1</item>
   <item>Item 1-2</item>
   <item>Item 1-3</item>
  </level>
  <level id="2">
   <item>Item 2-1</item>
   <item>Item 2-2</item>
   <item>Item 2-3</item>
  </level>
</data>
</xforms:instance>

and a repeat like this:
<xhtml:body>
  <xforms:repeat id="repeat1" nodeset="/data/level/item">
   <xforms:input ref=".">
    <xforms:label>Value</xforms:label>
   </xforms:input>
  </xforms:repeat>
</xhtml:body>

what would be the correct behavior? Should the repeat show 3 or 6 items 
and what would happen in case of an insert?

I couldn't find a clear answer to this from the Spec - help anyone?

Joern