<!-- LOSING THE PARAM VALUES HERE-->
	<xsl:if test="@refid = '$keyid'">

You are comparing the value of the @refid attribute with
the literal string '$keyid', not with the value assigned
to the keyid parameter. Remove the quotes.

Also, Im not sure how to avoid using the name & match attributes in the same
xsl:template element, and still cycle through the specific <KeyGroup>
elements for the parent <COMMAND> element?  Any help is greatly appreciated.

I'm not sure what you want to achieve but your template
matching COMMAND is an elaborate noop unless you pass
non-empty keyvalue and keyid parameters in an apply-template
you haven't shown us.
You can always split them:
 <xsl:template name="command">
   ...
 </xsl:template>
 <xsl:template match="command"/>