A few clarifications following a discussion with BIP author Jonas Schnelli yesterday and then thanks to review feedback from both Jonas and Murch.
These are compatible with the reference implementation in the BIP and with the current implementation in Bitcoin Core.
It is worthwhile to read the discussion in reference implementation https://github.com/bitcoin/bitcoin/pull/10387 (particularly https://github.com/bitcoin/bitcoin/pull/10387#discussion_r156861038).