Saxon

Could you be more specific about the actual error and what is being reported?

However, Saxon can only report what the XML parser tells it. The results may well vary depending on which XML parser you are using. Parsers vary in the quality of their diagnostics.

An XML parser handling IDREF/ID validation cannot detect that there is an unresolved IDREF until it reaches the end of the document. At that point it can report the error, and the quality of the diagnostics will depend on design trade-offs made by the people who wrote the XML parser. They may choose to retain location information associated with the IDREF value, in which case they will be able to report where the unresolved IDREF appears, or they may choose to drop this information (to save on memory usage) in which case they can only report the content of the unresolved reference. This is a simple trade-off between performance and usability.

Saxon lets you choose your own XML parser, so choose one that makes these trade-offs the way you like them.

Apart from that, this is entirely outside Saxon's control. DTD validation is done by the XML parser, not by Saxon; Saxon just passes on the diagnostics that come back.

There's no bug here because the XML parser is almost certainly behaving as designed, and it is conformant with the specifications. And if it were a bug, it would be a bug in the XML parser, not in Saxon.