http://pubs.opengroup.org/onlinepubs/9699919799/utilities/V3...
Two relevant excerpts: "The following "special built-in" utilities shall be supported in the shell command language ..."
"... The term "built-in" implies that the shell can execute the utility directly and does not need to search for it. An implementation may choose to make any utility a built-in; however, the special built-in utilities described here differ from regular built-in utilities ..."
(the two differences are irrelevant to this discussion as they do not mention PATH resolution behaviors)
These quotes taken together do not preclude the shell adding a built-in utility and assigning it the "special" status. The standard does not say that only the listed utilities are special; it says that the listed utilities shall be special. Adding a normal built-in utility (not "special") not on the list is explicitly condoned.
It is my belief that echo being a "special built-in utility" and thus having magic PATH behavior is POSIX compliant, although the standard is not 100% clear on this.
"If the command name matches the name of a special built-in utility, that special built-in utility shall be invoked."
Let echo be a "special built-in utility", and sh is compliant.