example won't validate because the schema location is a local path.
I used http://ngdc.noaa.gov/metadata/published/xsd/schema.xsd as the schema location to try validating and gmd:taxonomy is invalid content. The schema extensions have to be defined in their own namespace and a separate schema location provided for that namespace to validate. (maybe the one on your local file system is set up to do that?)
Still, bad practice to add you extension elements to a namespace that you are not the steward for....