Test case 2 requires the following for the error Bad_SequenceNumberUnknown:
Client handles the error, logs and/or displays an error to the end-user. The Client may choose to handle this in a number of ways, such as establishes a new Subscription, or disconnecting etc.

The logging makes sense.

But it makes no sense to create a new Subscription.

This error code most likely happes if there is a load scenario and the sent notification queue on the server side was already overwritten for a squence number. In this case, creating a new subscription even creates more load and makes things worse.

Another scenario where we saw this status code is if servers do not support sequence number handling at all (which is bad from my point of view but seems to be allowed by the smallest profile). If a client would recreate a subscription for this error, every Publish response would result in re-creation of the Subscription.