A comment in our code indicates that this behavior is intentional and matches other browsers. However, it's causing the hc_documentinvalidcharacterexceptioncreateelement and hc_documentinvalidcharacterexceptioncreateelement1 tests in the HTML version of the DOM Level 1 Core tests to fail. We need to either alter the tests to expect this behavior or fix WebKit to match the test.
<rdar://problem/4288266>
Fixed.