Ive noticed the problem with the dynamic mode setting as well.

It's not really a problem in most cases (many languages don't let the
name of a function call be determined dynamically at all:-) in XSLT you
always have the option of using apply-templates on some node to get
dynamic dispatch, or as there can only be a finite number of modes
defined in the stylesheet, if you want mode to be a parameter to the
function you can just have the body of the function being an xsl:choose
selecting on mode and applying templates in the requested mode.