Here is the latest development on the subject. I communicated with Mukul Gandhi. He is a chief maintainer of the Xerces-J XSD 1.1 project. Please see below his reply with the good news.

Hi Yitzhak,

I'm well and hoping same for you.

I could fix this bug, and the fix for this has been committed to Xerces-J's

XML Schema 1.1 dev repos branch at, https://github.com/apache/xerces-j/tree/xml-schema-1.1-dev.

I've also created a jira issue for this at,

https://issues.apache.org/jira/browse/XERCESJ-1765.

If you wish, you may build and use Xerces-J's XML Schema 1.1 implementation

from repos url cited above.

-- Regards, Mukul Gandhi

Regards, Yitzhak Khabinsky