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The document is in general pretty generic, so I don't know if the following
was discussed on the mailing list and is described in other documents, but
I think it should be described here or at least pointers to the specification
describing it should be inserted.

The problems I see are related to the Sequence Number you introduce in
Figure 5. If, used it is a 16-bit or 28 bit number. From the example you
provide, it seems that it is used like a Serial Number as described in
RFC 1982. The receiver uses this number for the PEF and POF. If this is
correct, this puts a limitation regarding the number of outstanding
packets on the sender. I don't see this limit being mentioned and I don't
see how this limit is enforced, since there does not seem to be an
acknowledgement.
The document states that an implementation MAY limit the maximum
number of sequence numbers being tracked. What happens if the
receiver runs out of this limit? How does a receiver protect itself against
a sender playing games with the sequence number? Limiting the resources
is only a MAY, so how is this done in the general case?