In xhj.dtx:

%    An interesting question is whether or not such templates should
%    set (or inhibit) paragraph indentations via a template key. After
%    all with cutouts on the top left such indentations are usually
%    not desired.\footnote{Right now only justification templates set
%    indentation but perhaps they should not, or both should, or what?}

In my opinion it is much better to have the parindent in the parshape
template, not in the justification template.

% justification centerfirst
%
%    This instance centers the first line of a paragraph and sets all
%    remaining lines as a solid block (including the last line). This

Is the first line really the same as the remaining text (i.e. a
continuation of the same sentence, rather than a kind of title)??
Strange.

There is a related kind of justification problem that is used in AMS
publications: if a figure caption is less than one line in length,
center it, otherwise use block justification:

  |-----------------------------------------------------------|
                  Figure 1. A short caption


  |-----------------------------------------------------------|
  Figure 2.  On the other hand  if there is  a long caption the
  first line  should not be centered,  the whole caption should
  be full-justified like this.

This is hard to handle by only declarative parameter settings. At some
level it is necessary to program a test for the length of the text. And
in practice there are some esthetic complications: If the caption width
is 1.01 of line width, clearly it is better to either leave it on one
line (overfull) or else the justification should use something like .9
of linewidth instead of 1.0.