Hmm, I can't remember any change between 2.1m1 and 2.1 that should have influence on the working of Saxon. But as I already said, the problem does not look like a problem with Saxon but a maybe more strict validation handling in Saxon 7.6. As far as I know Vadim uses Saxon without any problems within Cocoon. I don't know which version of Saxon, but at least with an already up to date Cocoon. Maybe he can add anything?
I do use Saxon 6.x (it is just much faster than anything else), with Cocoon 2.0.5-dev, and with no Xalan in classpath. I wrote this xpath processor impl for saxon because I have a components using xpath.
Vadim
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