Howdy HB,

The transposition steps wouldn't make any difference to how the key is understood. Composer is just trying to give you the "cleanest" key, given the actual notes in the song. In this case, because the song switches around the C/C#, it can be notated as either D or G, but given that the first melody note as well as the bass notes are both D, it's a pretty strong indicator that the song is actually in the key of D.

There are songs that switch between modes sometimes to give a different feeling to the different parts of a song. I just did "We Three Kings" this past week at church, and it's an excellent example of a song that is in minor mode for the verse (Em in my case), giving a bit of a dark somber feeling to the verse, and then switches to major mode (G major) for the chorus, to give a more upbeat feel to go along with the lyrics of the chorus.

ttfn,
Sherry