[noggin]

There is good reason for not doing this type of automatic frame rate switching.  Because the OS has zero context of what the app is doing, it can lead to a very bad user experience.  For example, many providers will insert short ads into the video stream that are at varying frame rates.  It causes the TV to constantly go black and resync.  Then you have providers that auto play content as you navigate the UI, again causing your TV to lose signal as you scroll through the shows.  The proper place to implement frame rate switching is in the actual app because only the app knows the best time to make the switch that will be least disruptive to the experience.  The app can also make the switch before the video starts playing or pause it so that you don't miss the beginning while your TV resyncs.

I guess as long as there is a system menu option available to turn this feature off, people can pick the setting that works best for them.

It's far more important for an Android device to properly support frame rate switching APIs so that well written apps (like Kodi) can control it.  This is where most Android TV devices fail (Google Chromecast, Tivo Stream, etc..).  The mainstream ones that work are Shield and Amazon Fire TV.

If you disable the automatic system-level frame rate switching, can Kodi still properly switch frame rates?

This is precisely why Roku disable system-level frame-rate switching on Netflix - the autoplay trailers caused resyncs between 24 and 25fps content.

The only way to do it properly is to let apps properly signal to the OS what frame rate content should be played at - which is how tvOS on the Apple TV 4K handles it, and how Fire OS on Fire TV devices does. HOWEVER this requires apps to be written to support it.  Many tvOS apps have been rewritten (including Netflix, Prime Video, Disney+, Apple TV+) but few Fire OS apps on Fire TV have been (the only one I know of is the Prime Video app)