When doing a selectPath() or execQuery() on an XmlObject or XmlCursor, "$this" gets bound automagically to the current node. In XmlOptions, there is a method to set a variable of a different name (than "this") to the current node - setXqueryCurrentNodeVar(String).
However, setting this option doesn't work when doing a selectPath(String, XmlOptions) using Saxon. [I tried this using XMLBeans 2.1.0 + Saxon 8.1.1 as well as XMLBeans latest svn + Saxon 8.6.1.]
The same thing works when using the BEA XQuery engine.