As can be seen I am writing there that composite events (which are taken from active database terminology) and complex events (which are not) may both represent situations, which does not say that this is the only way to represent situation (as saying that fish is an animal does not define what is an animal).
2. I have explained the basic idea of situation in this posting , simply said - a situation is a concept in the "real world" domain (not in the computer domain) that requires reaction. In some cases a single event determines a situation, in some cases, detecting a pattern determines a situation, and in other cases, patterns only approximate the notion of situation, and there is no 1-1 mapping between events and situation, note that in that posting I also have provided an example of non deterministic situations.
3. Regardless of the situation definition, Richard is absolutely right that all over the event processing life-cycle we may have instances in which the events are inaccurate or uncertain , and the reader is referred to this posting for some examples of uncertainty issues we are dealing with. This is an area that I am investigating in the last few years together withAvi Gal from the Technion and Segev Wasserkrug (our joint Ph.D. student who graduated recenlty with a Ph.D. dissertation was denoted as excellent by the exam committee). Hot from the oven - A paper about it is published in the recent (August 2008) issue of IEEE Transactions on Knowledge and Data Engineering, which is dedicated to "SPECIAL SECTION on Intelligence and Security Informatics". The actual paper can be downloaded from Avi Gal's website. Another paper related to the same study has been presented in DEBS 2008.
4. While I totally agree that in some cases the uncertainty is needed - and certainly some security applications are example, I also believe that the potential market for the more basic deterministic world is much higher, and we are far from picking up all the low hanging fruits of the deterministic event processing.
5. We still have challenges in defining the semantics of the different cases of handling uncertain events/patterns/situations. The fact that there are arithmetic of uncertainty help, but not everything that exists in AI research fits the real world requirements of scalability, performance etc..
6. About the comment of me viewing event processing as extension of active database technology -- I view event processing as a discipline by its own right (and this is a topic for another discussion which I'll defer), it has origins in several disciplines, one of them is active databases, but it has several more ancestors - sensor fusion, discrete event simulation, distributed computing/messaging/pub-sub and some more, and draws concepts from each of them. Anybody who reads my Blog can realize that there is a fundamental difference between active database that extends database engines and event processing that is not based on database technology, there are some other differences too.
7. My friendly advice to Tim is that before he makes assertion about how and what people think (and this does not refer necessarily to myself) he will re-read his own excellent posting :"red herring fallacies" .
More on event processing as a discipline - at a later post.