Use of blockDefault="#all"

I think I'm running into an interpretation issue by the various XML 
tools on how to handle #all value for block and blockDefault attributes.

It appears that xsi:types are still allowed to appear in a document if 
the type value is the same as the value defined for an element.  Some 
data binding tools seem to be outputing xsi:types when not necessary and 
this is causing some tool interoperability issues.

Xerces 2.8.1 and 2.9 seem to allow xsi:type to be included, as to XML 
Spy (I take with a grain of salt).   I'm curious how Saxon interprets 
the #all value.

My interpretation would be that xsi:type would not be allowed at all in 
the xml instance if a schema has the blockDefault attribute set to #all, 
but it seems that, isn't the case at least with Xerces.

Dave