Eric
I believe you're correct re nesting but did not seek out the cite. However, despite knowing to a certainty that you are correct re ol and ul I did copy the relevant part of the w3c standard for our sockpuppets.

FTR, directly from the w3c 4.01 spec (http://www.w3.org/TR/html401/struct/lists.html#h-10.2):

10.2 Unordered lists (UL), ordered lists (OL), and list items (LI)

<!ELEMENT UL - - (LI)+                 -- unordered list -->
<!ATTLIST UL
  %attrs;                              -- %coreattrs, %i18n, %events -
+-
  >
<!ELEMENT OL - - (LI)+                 -- ordered list -->
<!ATTLIST OL
  %attrs;                              -- %coreattrs, %i18n, %events -
+-
  >

Start tag: required, End tag: required
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Note that closing the </li> within either type of list is optional.