This document specifies a processing model and syntax for general purpose inclusion. Inclusion is accomplished by merging a number of XML information sets into a single composite infoset. Specification of the XML documents (infosets) to be merged and control over the merging process is expressed in XML-friendly syntax (elements, attributes, URI references).
This seems really like our overlay mechanism, but a bit more complicated. The listed authors are two guys, one at Microsoft and the other at BEA Systems. Does anyone know if any Mozilla people were involved?