Well all I know is the whole idea of xargs is to *separate* the things coming in into separate arguments.
So when the user uses -I, he expects it to just act the same, with the extra feature being that he can now also put things into the beginning or middle of lines, not just the ends. Never in his wildest dreams did he imagine that those things would be glued together. Sure, his eyeballs see BV> "[...] BV> Also, unquoted blanks do not terminate input items; BV> instead the separator is the newline character. BV> " but he cannot grasp that that has anything to do with this. Nor can I. So maybe xargs needs a new -T or whatever. Like -I but doesn't "spitefully" glue one's arguments together. And, the -I documentation needs to add a clear example, showing the user that just in case he is using more than one input, he better expect them to get glued together.