Impact of xml:space="preserve" on line break normalizing?

Hi Folks,

Thanks for clarifying that all line breaks in a document are normalized.

Here's a twist on this issue.  Suppose that an element has an
xml:space="preserve" attribute.  Do the line breaks in its content get
normalized?

For example, consider this XML document: (line break characters are
explicitly shown)

<?xml version="1.0"?> \n\r
<Test> \n\r
     <para xml:space="preserve">This is a \n\r
     simple paragraph. What \n\r
     do you think of it?</para> \n\r
</Test> \n\r

Note that the <para> element has an xml:space="preserve" attribute.

After normalizing the line breaks do we end up with this:

<?xml version="1.0"?> \n\r
<Test> \n
     <para xml:space="preserve">This is a \n
     simple paragraph. What \n
     do you think of it?</para> \n
</Test> \n

Observe that ** all ** line breaks have been normalized.

Or, do we end up with this:

<?xml version="1.0"?> \n
<Test> \n
     <para xml:space="preserve">This is a \n\r
     simple paragraph. What \n\r
     do you think of it?</para> \n
</Test> \n

Observe that the line breaks where xml:space="preserve" has been
specified are ** unaffected **.  The other line breaks are normalized.

Which is the correct behavior?  /Roger

P.S. Here is the relevant discussion in the XML Spec:
          http://www.w3.org/TR/REC-xml#sec-white-space