Error message is:

Required data is either missing or is invalid:

• Body: <header> is not allowed to be a child of <li>.

Is it possible to over-ride this behaviour? In HTML, headings are allowed to appear inside list items.

W3C says you are allowed to do so

http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd

<!ELEMENT li %Flow;>
<!ATTLIST li
%attrs;
type %LIStyle; #IMPLIED
value %Number; #IMPLIED
>
<!ENTITY % Flow "(#PCDATA | %block; | form | %inline; | %misc*">