Description:
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DOMDocument::loadXML() does not support UTF-16 encoded XML. This breaks the XML spec which says, "All XML processors MUST accept the UTF-8 and UTF-16 encodings of Unicode". As such, DOMDocument::loadXML() is not a conformant XML processor.

XMLReader supports this fine, which suggests something is wrong in the use of the libxml2 API.

Reproduce code:
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<?php
$data = "\xFE\xFF\x00\x3C\x00\x66\x00\x6F\x00\x6F\x00\x2F\x00\x3E";

$dom = new DOMDocument();
$dom->loadXML($data);
echo $dom->saveXML();

Expected result:
----------------
<?xml version="1.0"?>
<foo/>

Actual result:
--------------
PHP Warning:  DOMDocument::loadXML(): Start tag expected, '<' not found in Entity, line: 1 in /Users/gsnedders/Desktop/foo.php on line 5

Warning: DOMDocument::loadXML(): Start tag expected, '<' not found in Entity, line: 1 in /Users/gsnedders/Desktop/foo.php on line 5
<?xml version="1.0"?>