FULL PRODUCT VERSION :
java version "1.6.0_10"
Java(TM) SE Runtime Environment (build 1.6.0_10-b33)
Java HotSpot(TM) Client VM (build 11.0-b15, mixed mode, sharing)

A DESCRIPTION OF THE PROBLEM :
Trying to convert text/xml to the StAXEvents through the Identity xslt transform fails. For illustraction see the attached source.

Putting simple XML with a prefixed element:
<ns:elem xmlns:ns='http://some.com&#39;/>

results in the following XMLEvents:
<?xml version="1.0" encoding='UTF-8'?>
<['http://some.com&#39;]:ns:elem xmlns:ns='ns' xmlns:xmlns='http://some.com&#39;>
</['http://some.com&#39;]:ns:elem>
ENDDOCUMENT

Note the invalid namespace context here:
xmlns:ns='ns' xmlns:xmlns='http://some.com&#39;

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
Run the attached program.

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
The XML identical to the original is expected to be printed.
ACTUAL -
Exception while transforming.

ERROR MESSAGES/STACK TRACES THAT OCCUR :
ERROR: 'prefix ns has been already bound to http://some.com. Rebinding it to ns is an error'
Exception in thread "main" javax.xml.transform.TransformerException: javax.xml.stream.XMLStreamException: prefix ns has been already bound to http://some.com. Rebinding it to ns is an error
at com.sun.org.apache.xalan.internal.xsltc.trax.TransformerImpl.transform(Unknown Source)
at com.sun.org.apache.xalan.internal.xsltc.trax.TransformerImpl.transform(Unknown Source)
at XercesTest.main(XercesTest.java:83)
Caused by: javax.xml.stream.XMLStreamException: prefix ns has been already bound to http://some.com. Rebinding it to ns is an error
at com.sun.org.apache.xalan.internal.xsltc.trax.SAX2StAXEventWriter.startElement(Unknown Source)
at com.sun.org.apache.xml.internal.serializer.ToXMLSAXHandler.closeStartTag(Unknown Source)
at com.sun.org.apache.xml.internal.serializer.ToSAXHandler.flushPending(Unknown Source)
at com.sun.org.apache.xml.internal.serializer.ToXMLSAXHandler.endElement(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.AbstractSAXParser.endElement(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.AbstractXMLDocumentParser.emptyElement(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLNSDocumentScannerImpl.scanStartElement(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLNSDocumentScannerImpl$NSContentDriver.scanRootElementHook(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentFragmentScannerImpl$FragmentContentDriver.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentScannerImpl$PrologDriver.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentScannerImpl.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLNSDocumentScannerImpl.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentFragmentScannerImpl.scanDocument(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.XML11Configuration.parse(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.XML11Configuration.parse(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.XMLParser.parse(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.AbstractSAXParser.parse(Unknown Source)
at com.sun.org.apache.xalan.internal.xsltc.trax.TransformerImpl.transformIdentity(Unknown Source)
... 3 more
---------
javax.xml.stream.XMLStreamException: prefix ns has been already bound to http://some.com. Rebinding it to ns is an error
at com.sun.org.apache.xalan.internal.xsltc.trax.SAX2StAXEventWriter.startElement(Unknown Source)
at com.sun.org.apache.xml.internal.serializer.ToXMLSAXHandler.closeStartTag(Unknown Source)
at com.sun.org.apache.xml.internal.serializer.ToSAXHandler.flushPending(Unknown Source)
at com.sun.org.apache.xml.internal.serializer.ToXMLSAXHandler.endElement(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.AbstractSAXParser.endElement(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.AbstractXMLDocumentParser.emptyElement(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLNSDocumentScannerImpl.scanStartElement(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLNSDocumentScannerImpl$NSContentDriver.scanRootElementHook(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentFragmentScannerImpl$FragmentContentDriver.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentScannerImpl$PrologDriver.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentScannerImpl.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLNSDocumentScannerImpl.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentFragmentScannerImpl.scanDocument(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.XML11Configuration.parse(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.XML11Configuration.parse(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.XMLParser.parse(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.AbstractSAXParser.parse(Unknown Source)
at com.sun.org.apache.xalan.internal.xsltc.trax.TransformerImpl.transformIdentity(Unknown Source)
at com.sun.org.apache.xalan.internal.xsltc.trax.TransformerImpl.transform(Unknown Source)
at com.sun.org.apache.xalan.internal.xsltc.trax.TransformerImpl.transform(Unknown Source)
at XercesTest.main(XercesTest.java:83)
---------
javax.xml.stream.XMLStreamException: prefix ns has been already bound to http://some.com. Rebinding it to ns is an error
at com.sun.xml.internal.stream.writers.XMLStreamWriterImpl.writeNamespace(Unknown Source)
at com.sun.xml.internal.stream.writers.XMLEventWriterImpl.add(Unknown Source)
at com.sun.org.apache.xalan.internal.xsltc.trax.SAX2StAXEventWriter.startElement(Unknown Source)
at com.sun.org.apache.xml.internal.serializer.ToXMLSAXHandler.closeStartTag(Unknown Source)
at com.sun.org.apache.xml.internal.serializer.ToSAXHandler.flushPending(Unknown Source)
at com.sun.org.apache.xml.internal.serializer.ToXMLSAXHandler.endElement(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.AbstractSAXParser.endElement(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.AbstractXMLDocumentParser.emptyElement(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLNSDocumentScannerImpl.scanStartElement(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLNSDocumentScannerImpl$NSContentDriver.scanRootElementHook(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentFragmentScannerImpl$FragmentContentDriver.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentScannerImpl$PrologDriver.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentScannerImpl.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLNSDocumentScannerImpl.next(Unknown Source)
at com.sun.org.apache.xerces.internal.impl.XMLDocumentFragmentScannerImpl.scanDocument(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.XML11Configuration.parse(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.XML11Configuration.parse(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.XMLParser.parse(Unknown Source)
at com.sun.org.apache.xerces.internal.parsers.AbstractSAXParser.parse(Unknown Source)
at com.sun.org.apache.xalan.internal.xsltc.trax.TransformerImpl.transformIdentity(Unknown Source)
at com.sun.org.apache.xalan.internal.xsltc.trax.TransformerImpl.transform(Unknown Source)
at com.sun.org.apache.xalan.internal.xsltc.trax.TransformerImpl.transform(Unknown Source)
at XercesTest.main(XercesTest.java:83)


REPRODUCIBILITY :
This bug can be reproduced always.

---------- BEGIN SOURCE ----------
import java.io.ByteArrayInputStream;

import javax.xml.stream.XMLEventWriter;
import javax.xml.stream.XMLOutputFactory;
import javax.xml.transform.TransformerFactory;
import javax.xml.transform.stax.StAXResult;
import javax.xml.transform.stream.StreamSource;

public class XercesTest {

public static void main(String[] args) throws Exception {
String xml = "<ns:elem xmlns:ns='http://some.com&#39;/>";
TransformerFactory xformFactory = TransformerFactory.newInstance();
StreamSource src = new StreamSource(new ByteArrayInputStream(xml.getBytes()));
XMLEventWriter ew = XMLOutputFactory.newInstance().createXMLEventWriter(System.out);
StAXResult result = new StAXResult(ew);
xformFactory.newTransformer().transform(src, result);
}
}

---------- END SOURCE ----------

CUSTOMER SUBMITTED WORKAROUND :
Use of 'stax-utils' instead.