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1b1ed1a
(Get the code!)
Kristian, your insights into the problem are spot on.
The documentation is incorrect. The "statement undo", is only done correctly in the special case that the statement only affects one row. At least, this is all that is done in the current implementation.
As you say, PBXT should return an error in all other cases, and then continue to return an error until the end of the transaction.