lists guidelines on passing HTML tags within a string. Basically xsd:String cannot be used. You will have to use xsd:any for this. As the String basic schema type forbids nested tags. Look at the aforementioned JIRA issue.
Thanks for your attention.
However, the instance document does not contain HTML because the serializer on the client side (generated by JWSDP) converted
<em>(The second block is supposed to contain the characters "& l t ; e m & g t ;" in case they get changed back to the symbols).
So the problem isn't that I'm passing HTML (which I agree is invalid unless the schema uses xsd:any), instead I think the string parsing routine is splitting the string up on "special character" boundaries, and only storing the last chunk into the value object artifact.
For example, although I'm not in a position to test it right now, I believe changing the test case to attempt to pass the string
Joan & Edwill result in just the " Ed" part being stored into the value object.