Conformance Test question

[Gary Stephenson <garys@ihug.com.au>]

In the "oasis" suite of the Conformance Test Suite the following test case
asserts the following to be valid XML:

//  file  p09pass1.xml

<!DOCTYPE doc SYSTEM "p09pass1.dtd">
<doc/>

//  file  p09pass1.dtd

<!ELEMENT doc EMPTY>
<!ENTITY % ent1 "">
<!ENTITY ent2 "text2">
<!ENTITY % ent3 "<!-- <!DOCTYPE <!ELEMENT <? '''&#34;&ent2; %ent1;">
<!ENTITY % ent4 '""&#x27;&#39;"'>

// end-of-file

Yet it seems to me (and my processor <g>) that the parameter entity ent3
should violate the following (from Secion 2.8 Prolog and Document Type
Declaration) :

<transcript section="2.8">
Validity constraint: Proper Declaration/PE Nesting

Parameter-entity replacement text must be properly nested with markup
declarations. That is to say, if either the first character or the last
character of a markup declaration (markupdecl above) is contained in the
replacement text for a parameter-entity reference, both must be contained in
the same replacement text

</transcript>

Is it because (as Rob Lugt has opined in prior discussions) that there is in
fact no parameter-entity reference - thus there is no actual "replacement
text"?  (If a parameter-entity improperly nests itself in the forest, and
there is no PE reference there to expand it's trangression, ... <g>)

On a somewhat unrelated note, what does the following actually mean?

<transcript section="4.3.2">

All external parameter entities are well-formed by definition

</transcript>

many tias,

gary