I don't know much about XSLT2 or Saxon's extensions, but the errors from your second case here seem fairly simple to fix:

<xsl:import href="f/func-exp.xsl"
use-when="system-property('System.getenv(&quot;f&quot;)')= 'true'"  />

Putting the quotes around f made that attribute into invalid XML. Does that work?

~ Scott

<xsl:value-of
select="system-property('System.getenv(&quot;f&quot;)')"  />
</xsl:message>

which is a simpler example.
returns
Error on line 16 of crap.xsl:
  XTDE1390: Invalid QName {System.getenv("f")}
Transformation failed: Run-time errors were reported

Seems to be my misunderstanding of 'Java system property' and
OS env var, as returned by
http://java.sun.com/javase/6/docs/api/java    \
/lang/System.html#getenv%28java.lang.String%29

Not even sure what the former is!
Possibly something passed to the jvm via -D param.

--
Dave Pawson
XSLT XSL-FO FAQ.
http://www.dpawson.co.uk