It seems to me that, xs:annotation child of xs:assertion, cannot make use of xpathDefaultNamespace attribute, since there can never be XPath expressions to be evaluated within xs:annotation.

But my other question still begs for answer. i.e, whether xpathDefaultNamespace attribute has any valid uses with xs:assertion? As far as I know, xs:assertion always has to evaluate XPath expressions involving $value and literals. As per XSD 1.1 spec, $value is "a value consisting of a sequence of zero or more atomic values".