Somewhere between 7.0 and the current state, the handling of the "AlwaysCore", "SendCoreEvents", "CoreKeyboard", and "CorePointer" config options in xorg.conf was broken. See xorg-server-1.4/hw/xfree86/common/xf86Xinput.c

 115 xf86ProcessCommonOptions(LocalDevicePtr local,
 116                          pointer        list)
 117 {
 118     if (xf86SetBoolOption(list, "AlwaysCore", 0) ||
 119         !xf86SetBoolOption(list, "SendCoreEvents", 1) ||
 120         !xf86SetBoolOption(list, "CorePointer", 1) ||
 121         !xf86SetBoolOption(list, "CoreKeyboard", 1)) {
 122         xf86Msg(X_CONFIG, "%s: doesn't report core events\n", local->name);
 123     } else {
 124         local->flags |= XI86_ALWAYS_CORE;
 125         xf86Msg(X_CONFIG, "%s: always reports core events\n", local->name);
 126     }
 127 
...

If one uses the "AlwaysCore" option in an "Section InputDevice", the comparison above evaluates to *true* and such, XI86_ALWAYS_CORE is *not* set!

In 7.0, this option handling was correct.