On the rare chance that someone else stumbles across this problem ...
By default, Java's Xalan transformer for creating XML documents does not
correctly encode emojis. Instead of 👍 for the thumbs up emoji,
Xalan encodes it as ��. As Arthur pointed out, this is not a
valid entity encoding.
One solution is to use Saxonica's Saxon 11 transformer, which produces the
expected output:
the 👍 emoji
In Java, switching to Saxon entails installing the Jar files for Saxonica
and its resolvers. Then set the system property before invoking the XML
transformer: System.setProperty( "javax.xml.transform.TransformerFactory",
"net.sf.saxon.TransformerFactoryImpl" );
ConTeXt handles the emoji from the transformed XML file without any issues.
Thank you, Arthur.