When processing nested XIncludes, the processor resolves each relative 
xml:base relative to the top level document. According to my reading of 
xml:base, a relative xml:base should resolve relative to its parent 
element.

Here are three short example files to illustrate the problem.
This is the top level document:

<?xml version="1.0" encoding="utf-8"?>
<book>
<xi:include href="modules/chapter1.xml" parse="xml"   
xmlns:xi="http://www.w3.org/2003/XInclude"/>
</book>

This is modules/chapter1.xml:

<?xml version="1.0" encoding="UTF-8"?>
<chapter>
<xi:include href="sections/section.xml" parse="xml" 
xmlns:xi="http://www.w3.org/2003/XInclude"/>
</chapter>

This is modules/sections/section.xml:

<?xml version="1.0" encoding="utf-8"?>
<section>
<para>
This is some text to see where I'm going.
</para>
</section>

When I process includetop.xml with xmllint --xinclude, I get:

<?xml version="1.0" encoding="utf-8"?>
<book>
<chapter xml:base="modules/chapter1.xml">
<section xml:base="modules/sections/section.xml">
<para>
This is some text to see where I'm going.
</para>
</section>
</chapter>
</book>


I would have expected the second xml:base to be "sections/section.xml" 
since the section element's parent has an xml:base that 
includes "modules".

I need to resolve this so that the DocBook XSL stylesheets can properly 
resolve the relative locations of graphics files within an element that 
has xml:base.  I thought it needed to merge the xml:base attributes for 
all of its ancestors, but the behavior of xmllint suggests it just needs 
to use the closest ancestor's xml:base.