I found this link http://www.w3.org/XML/Datamodel.html which isn't a specification but its on the w3.org website so i'll take it as gospel until someone finds a document that says otherwise. If you load that up and scroll down the page he has a blurb on when newlines can be included for a humans sake and the computer is going to ignore them. The two places are immediatly preceding a tag and immediatly following a tag. So those cases above, though they look strange and I aggree they should probably be changed, are completely legal.

Yea my 200th post! Hurrah. I was hoping for something more stunning, guess i'll have to plan my 300th more carefully :).