RAG vs. Direct Context: I Tested Both on Real Documents, Here's What Broke

A hands-on test of BGE-M3 + Qwen3 (RAG vs. direct-context answering) on a real research paper and a full-length book including a retrieval bug hiding in a footnote, and one surprisingly good model behavior. I wanted to answer a simple question: when you feed a document to an AI model, is it actually reading it or just pattern-matching to whatever text happens to look similar to your question? So I built a small open-source pipeline to test this directly. For any document and question, it generates two separate answers: RAG answer: BGE-M3 finds the most relevant chunks of the document, and Qwen3 answers using only those chunks. Direct answer: Qwen3 reads the raw document text directly, no retrieval involved. Both run on a free Google Colab GPU. I kept the retrieval side deliberately "vanilla" fixed-size chunking, plain cosine similarity, no reranking, no fancy tricks so I could see exactly where the basic version breaks before adding any fixes. Before running my first real test, I already knew one thing to guard against: reference lists. Early experimentation (not covered here) showed that a paper's bibliography, once chunked like any other text, can get retrieved as if it were real content a citation for a paper about "text embeddings" can look deceptively similar to a generic question about a document's topic. So going in, my pipeline already strips everything after a References/Bibliography heading before chunking. With that fix in place, I ran two real tests. Test 1: A research paper on Nepali legal machine translation First document: a SIGUL 2024 workshop paper on a bidirectional English-Nepali machine translation system for the legal domain. Question: "What is this paper about?" RAG answer: This paper presents the first transformer-based bidirectional machine translation system for the English-Nepali legal domain, using a custom-built parallel corpus of 125,000 sentences. It achieves encouraging BLEU scores and addresses the scarcity of domain-specific legal tr