Passing tree fragment as a tunneled param to be access

The input and output formats that I am working with both use IDs.
Unfortunately, the mapping between the IDs is rather complex.
Fortunately, I can dymanically determine the mapping. This is done by
creating elements within the transform (and in its own namespace) that
pair the ids. All of these pairings sit in a variable in the /
template.

My problem: While I'm processing the input structure with
apply-templates, when the input refers to an id, I need to dip into my
pairings variable to look up the appropriate output id. I use a key
for this and use the pairings variable to define the tree fragment
scope for the key. It appears that when I pass the pairing variable
into the apply-templates, it becomes a string and is not recognized as
a tree fragment.

Hopefully any ambiguity of my description will be absolved with the
following domain-independent code. The Input, current xsl, and desired
output follow.The xsl includes comments describing current problem in
code.

Kindest thanks and highest regards,
Tim

Error on line 34 of file:/Users/tml/Desktop/question/attempt.xsl:
 XPTY0019: Required item type of first operand of '/' is node();
supplied value has item
 type xs:string
Transformation failed: Run-time errors were reported

Error on line 37 of file:/Users/tml/Desktop/question/attempt.xsl:
 XPTY0019: Required item type of first operand of '/' is node();
supplied value has item
 type xs:string
Transformation failed: Run-time errors were reported

======== input ==========
<in-objects>
 <in-object ref="AAA"/>
 <in-object ref="BBB"/>
 <in-object ref="CCC"/>
</in-objects>

======== desired output =========
3
<out-object>
  <refers-to>input @ref: AAA count($objects/*): 3 get @out-id:
111</refers-to>
</out-object>

========= current xsl ==========
<xsl:transform version="2.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
 xmlns:xfm="intermediate nodes created during transform not in input
and not for final output"
 exclude-result-prefixes="xfm">

<xsl:output method="xml" indent="yes"/>
<xsl:key name="objects" match="xfm:object" use="@in-id"/>

<xsl:template match="/">
 <xsl:variable name="objects">
   <!-- This would be generated with an apply-templates, but is hard
coded for example -->
   <xfm:object in-id="AAA" out-id="111">text a 1</xfm:object>
   <xfm:object in-id="BBB" out-id="222">text b 2</xfm:object>
   <xfm:object in-id="CCC" out-id="333">text c 3</xfm:object>
 </xsl:variable>
 <xsl:value-of select="count($objects/*)"/>
 <xsl:apply-templates select="in-objects">
   <xsl:with-param name="objects" select="$objects" tunnel="yes"/>
 </xsl:apply-templates>
</xsl:template>

<xsl:template match="in-objects">
 <xsl:apply-templates select="in-object[1]"/>
</xsl:template>

<xsl:template match="in-object">
 <xsl:param name="objects"/>
 <out-object>
   <refers-to>

     <!-- LINE 34: I expect $objects to be a tree fragment of 3
xfm:object here, but it is a string. -->
     <xsl:value-of select="concat('count($objects/*):
',count($objects/*),' ')"/>

     <!-- LINE 37: After $objects is a tree fragment here, this does
not select '111' -->
     <xsl:value-of select="concat('get @out-id:
',$objects/key('objects',@ref)/@out-id)"/>

   </refers-to>
 </out-object>
</xsl:template>

<xsl:variable name="NL">
<xsl:text>
</xsl:text>
</xsl:variable>