XSLT 2.0 variable using the wrong context when assigned early in a different context

The attached XSLT 2.0 running against the attached XML is expected to say "dog" or "cat" everywhere and not "client". Yet, xmlpatterns says "client" in two places. (see a.out, where we see 'client' it should be 'cat' or 'dog')

This is certainly due to the fact that the variable is set to "name(..)" and that "name(..)" is interpreted from where the variable is being used when in XSLT 2.0 (and 1.0 and 3.0) it is clearly to be using the value from where it was defined and not where it is used.