Proposed resolution (approved by CWG 2024-11-08):

1. Change in 5.2 [lex.phases] bullet 1.4 as follows:

   • ...
   • The source file is analyzed as a preprocessing-file (15.1 [cpp.pre]). Preprocessing directives are executed, macro invocations are expanded, and _Pragma unary operator expressions are executed. A #include preprocessing directive causes the named header or source file to be processed from phase 1 through phase 4, recursively. All preprocessing directives are then deleted.
   • ...

2. Change in 5.2 [lex.phases] bullet 1.7 as follows:

   Whitespace characters separating tokens are no longer significant. Each preprocessing token is converted into a token (5.6 [lex.token]). The resulting tokens constitute a translation unit and are syntactically and semantically analyzed as a translation-unit (6.6 [basic.link]) and translated.

(From submission #615.)

Subclause 15.1 [cpp.pre] defines the grammar production preprocessing-file, but nothing in the standard specifies that a translation unit is ill-formed if it fails to match that grammar. Similarly, translation-unit has no effect.