redefine, xs:group and UPA

xsv v2.7 and xerces v2.6.2 disagree on the legality of the attached schema documents.  xerces thinks they are alright but xsv thinks there is a UPA violation (because of the wildcard in group.xsd).

I believe that xsv is correct but would like other opinions.  xerces complains if the wildcard appears "inlined" but not when it occurs because of a group reference...which is where I think it's bug is.  Can anyone confirm this?

pvb