More questions about conformance and entities

I thought namespaces were a pain to implement.

I have a question about "Validity constraint: Proper Declaration/PE 
Nesting" [1] I understand that this is saying the following is violates 
the VC:

Doc1.dtd
========
<!ENTITY % e "<!-- a ">
<!ENTITY % f "%e;comment -->">


Doc2.dtd
========
<!ENTITY % e "<!-- a ">

But what about this:

Doc3.dtd
========
<!ENTITY % e "<foo>">
<!ENTITY % f "%e;</foo>">
<!ENTITY g "%g;">

I think that it is legal but who knows anymore. As near as I can figure 
it doesn't violate this VC because it is not a markup decl specifically. 
Also, it is not a violation of "Validity constraint: Proper Group/PE 
Nesting" [2]. I assume it is valid because of this text in 4.3.2 "An 
internal general parsed entity is well-formed if its replacement text 
matches the production labeled content. All internal parameter entities 
are well-formed by definition."


Bonus questions: Which wins out: "Well-formedness constraint: In DTD" 
[3] or "Not Recognized" [4]


[1] http://www.w3.org/TR/REC-xml/#vc-PEinMarkupDecl
[2] http://www.w3.org/TR/REC-xml/#vc-PEinGroup
[3] http://www.w3.org/TR/REC-xml/#indtd
[4] http://www.w3.org/TR/REC-xml/#not-recognized

Thanks,
Jeff Rafter