Thanks for your answers asgm and mvut, but I think you've misunderstood the situation.
I have already put the device in command mode by asserting the DIN pin low while asserting the RESET pin low, then high.
The device responds back with "OK\r" (if it is configured in transparent mode. i.e. AP = 0)
or responds back with an API frame containing "OK\r" (if configured in API mode. eg. AP = 1 or AP = 2).
Anyway I've discovered that regardless of how the "OK\r" is reported back (raw or in frame), the device accepts raw AT commands for reporting/configuring.
This is what I want so all is good
It's just that receiving an "OK\r" in a frame was confusing, as it lead me to believe that the XBee was in API mode and that I would have to set parameters using AT Command FRAMES, rather than raw AT strings.
I don't know if it is a bug or if it is intentional that the "OK\" is reported back as a frame when breaking into command mode via DIN/RESET method ??
Anyway, I've got it working so life aint too bad