You're right, there is a certain amount of "dumbness" that my script exhibits because to change your mind between mod or vanilla, you actually have to edit the script file and comment/uncomment the lines yourself.
But I think that a Minecraft server is more enjoyed and better managed if you're familiar with Terminal and bash. Applescript is something I love too, but for this it really seems bloated for what you're trying to accomplish.
I also did not mean to say that my above script was meant as a solution to your problem. In fact, it's the solution to MY problem, and I was making it available for you to consider in your journey.
To be honest, even though you explained your end goal, I didn't understand the point of detecting if a folder exists or not and to launch a different version based on that. Again, I think bash is better suited to your goal since I suspect the majority of Minecraft servers are running on Linux, and bash is a common element between Mac and Linux (and therefore more support from the MC server forums).
But XV provided support on your compilation error, something I couldn't do away from my Mac at the time I wanted to contribute my solution to my problem.
If you want to explore bash scripting, I recommend this guide: http://tldp.org/LDP/abs/html/