A parameter entity is not being expanded. The discrepancy is that the output is:
but it should be:
default="-//W3C//DTD HTML 4.01 Transitional//EN"/>
html.dtd -- a vastly truncated version of the HTML 4.01 DTD containing nothing but what's needed to demonstrate the bug
run.txt -- what the run of dtdparse looked like, complete. As you'll see, curiously, the entity text is correctly expanded. The expanded version doesn't appear in the default attribute value, though.
sgml.soc -- the catalog file invoked on the command line in the attached 'run' file. It's very vanilla.
sgml.dcl -- the sgml declaration referenced in sgml.soc. It's very vanilla, too.