I had actually already tackled this in 6.0. What I have there so far is:

public enum QueryLiteralRendering {
	/**
	 * Always render as a SQL literal, never a parameter
	 */
	AS_LITERAL( "literal" ),
	/**
	 * Always as a parameter, never as a literal
	 */
	AS_PARAM( "param" ),
	/**
	 * As a parameter when the literal occurs outside the SELECT clause,
	 * otherwise render as a SQL literal.
	 */
	AS_PARAM_OUTSIDE_SELECT( "param-outside-select" );

        ...
}

We can add your AUTO here I guess, although I am not sure of the usefulness of it.

The special AS_PARAM_OUTSIDE_SELECT is to account for databases (DB2 for sure) that do not like parameters in the SELECT clause. In such cases we have 2 options:

1. render the literal directly.
2. render as a param, but wrap in a cast

We could also offer that as a distinction: AS_PARAM_OUTSIDE_SELECT + AS_PARAM_WRAPPED_IN_SELECT. Or alternatively we could simply interpret AS_PARAM + Dialect#requiresCastingOfParametersInSelectClause == true as "AS_PARAM_WRAPPED_IN_SELECT". I think the second option is the best option.