Modularization of XHTML may still be in Candidate Recommendation, but XHTML Basic, built on top of it, is now a W3C Recommendation.
The HTML Working Group does not appear to be concerned about building a Recommendation on top of something which is still in Candidate Recommendation:
"At the time of this publication, the Candidate Recommendation review period for 'Modularization of XHTML' has closed. Based on that review, the W3C HTML Working Group believes that the definition of modules used in XHTML Basic is stable, and the Working Group does not expect to make changes to 'Modularization of XHTML' that would be incompatible with XHTML Basic."
XHTML Basic provides a subset of XHTML intended for use with small information appliances - cell phones, PDAs, and other systems without full-fledged HTML/XHTML browsers.
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