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XML Schema usage and WinFS

Stefan Tilkov,

Don Box writes:

As for WinFS's choice of coining a new schema language vs. using XML Schema, unless the WinFS data model is identical to the XML Infoset, it would be a mistake to bastardize XSD to describe something it wasn't intended to describe. WSDL/1.1 made that mistake once before (see use="encoded") and it's taking years to undo the damage.

I'm seriously puzzled, and I would kindly ask anyone to explain this to me. I was always convinced that it's actually use="encoded" where XML Schema is not used, while it is with use="literal". So isn't this backwards — shouldn't the critique of WSDL/1.1/encoded be that it did not use XML Schema for something it was intended for?

Update: After a longish IM session with Radovan, I believe this is more due to a misunderstanding on the way the original article was phrased. I was wrong in assuming that WSDL/1.1 and SOAP encoding did not use XSD - it used it, but added WSDL-specific extensions, e.g. for array, while the use=literal sticked to pure XSD.