Here’s a thought:
Since we have these buttons
Is there a necessity to also have this switch?
The difference this switch makes is that it adds the object type and mode buttons on the header. It also allows for the few tool-specific nodes to appear in the add menu, etc. These changes are pretty small.
Why not just make these changes take place when the “Tool” checkbox is checked instead?
And since the same node group can be set to only work as a modifier, but not a tool, and visa versa, the search (on the header) separation of the two makes no sense.
Now, instead of typing the warning “Node must run as tool” on the modifier, when a tool node is used, and making the modifier not work at all, the tool-specific nodes could output a default value. For example:
The “Selection” node, would just output a “Yes” (Everything) when used in a modifier.
The “3D cursor” node could just output “0,0,0”… Etc.
With these changes, the node group may not give expected results, but it would work without error, for the modifier. There should still be a soft warning on the node itself, that this node only works for tools, not modifiers. (“i” icon, not “!” icon".)