The IESG has already agreed that there is no problem with a Standards Track RFC containing a normative an Informational RFC that specifies a cryptographic algorithm.
The SASL WG is planning on using the base32 encoding method from draft-josefsson-base-encoding-04.txt as a normative reference for its SASL GSSAPI work, which is intended for the Standard Track. Of course, draft-josefsson-base-encoding-04.txt is already approved as an Informational RFC.
Should we extend the exemption to include encoding algorithms too?
Why on earth should we? The specification of the encoding is our own (albeit trivial) work, it is integral to the specification and its syntax, and we've historically included such specifications in standards track documents. I am absolutely opposed to this. Ned