Through a lot of trial and error, I discovered that
<href>./../foo.kml</href>
works but
<href>../foo.kml</href>
does not.
I finally realized what was going on when I saw the debug output in the Qt Creator console and realized that the plugin was discarding the relative path when it began with `..`. After a little guesswork, I hit upon `./` as workaround.
I saw this on Icon objects, but presumably it's elsewhere as well.
This is using SDK v100.11.2 on macOS.