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How are you using Context mode that having a list of all the active contexts is too distracting? That's the part I don't understand.... When I go to Context mode, it's generally to do some actions, and whether focused on a group of one or more projects or looking at the whole enchilada, I select a context appropriate to my current situation, and do those actions as circumstances permit. Either that or I'm looking at a perspective that is schedule-oriented (like the one showing everything that has a due date today), and I just work the list, regardless of the contexts. I'm often very easily distracted, but not by the presence of empty items in a list that I'm largely ignoring! Won't switching back to Project mode eliminate any distraction from these "empty" contexts?

I don't think I'm strongly opposed to the application behaving in the way you request, but it does seem to me to be more of a theoretical problem, rather than a practical one. I'm trying to imagine a scenario where it would matter, but I might need some help in the form of an example :-)