Is the following \"allowed\" or simply bad use of XML? I cannot find restrictions on this, but it feels a bit weird.
You can choose from
I think it's best to reserve mixed content for one purpose only: to annotate (or "mark-up") sections of natural language text. So a good test to apply is, does the text still make sense if the markup is removed?
In your example, my only criticism would be that if you remove the markup, what's left isn't grammatical: it's missing a full-stop after the first sentence.