Almost all the tools we use allow this model, except for one. And reading the spec I have the impression that it is indeed not allowed.

It is a union using a simpletype that refers to another union.

<schema targetNamespace="urn:mpeg:mpeg7:schema:2001" xmlns:mpeg7="urn:mpeg:mpeg7:schema:2001" xmlns="http://www.w3.org/2001/XMLSchema" elementFormDefault="qualified" attributeFormDefault="unqualified">
 <simpleType name="termRelationQualifierType">
  <union>
   <simpleType>
    <restriction base="NMTOKEN">
     <enumeration value="NT"/>
     <enumeration value="BT"/>
     <enumeration value="RT"/>
     <enumeration value="US"/>
     <enumeration value="UF"/>
    </restriction>
   </simpleType>
   <simpleType>
    <restriction base="mpeg7:termReferenceType"/>
   </simpleType>
  </union>
 </simpleType>
 <simpleType name="termReferenceType">
  <union>
   <simpleType>
    <restriction base="NMTOKEN">
     <whiteSpace value="collapse"/>
     <pattern value=":[^:]+:[^:]+"/>
    </restriction>
   </simpleType>
   <simpleType>
    <restriction base="anyURI"/>
   </simpleType>
  </union>
 </simpleType>
</schema>