If I remember correctly, the DOCTYPE is not needed in ePub. But if it's present it must be correct (which implies you cannot have SVG code, for instance). It may be that Sigil wants it, but according to the spec, files without a DOCTYPE should be XHTML anyway (which normal named entities).
The above is valid only for HTML-like files, of course, you cannot use named entities in XML files, such as the OPF or NCX, you must use numerical entities or the actual characters there. This means that you'd better not use named entities in titles, I guess (maybe Sigil could automatically convert entities to characters when creating the TOC, if it doesn't already).
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