Re: misc. confusion on "footnote" handling

It's not clear whether you actually want a parameter (declared with xsl:param, set on the call with xsl:with-param) or you're using the term 'parameter' in a more descriptive way. Perhaps you want two different templates for the two different kinds of citation:

<!-- citations appearing in footnotes -->
<xsl:template match="db:footnote/db:citation">
  ...
</xsl:template>

<!-- other citations -->
<xsl:template match="db:citation">
  ...
</xsl:template>

Author-year would render the citation as (Doe, 1999)
Numbered would be like (1)

<xsl:template match="db:citation">
  <xsl:choose>
    <xsl:when test="$class='footnote'">
      <footnote>
        <xsl:apply-templates select="." mode="citation" />
      </footnote>
    </xsl:when>
    <xsl:otherwise>
      <xsl:apply-templates select="." mode="citation" />
    </xsl:otherwise>
  </xsl:choose>
</xsl:template>