I usually expose a CollectionView from the view model and set the IsSynchronizedWithCurrentItem property on the ItemsControl displaying the list in the view. Then when the command is executed, I can inspect the CollectionView.CurrrentItem propety to see what is currently selected.
EDIT: This answer addresses the first question in your, um, question. Rather than your view sending the currently selected item to the ViewModel, the ViewModel keeps track of the currently selected item. So using this technique you don't need to work out how to send that information.
Something like this in your view model:
class ApplicationViewModel
{
// Exposes a list of ShipmentViewModels.
public CollectionView Shipments { get; private set; }
// A DelegateCommand or similar, that when executed calls AddPallet().
public ICommand AddPalletCommand { get; private set; }
void AddPallet()
{
ShipmentViewModel shipment = (ShipmentViewModel)Shipments.CurrentItem;
shipment.Pallets.Add(new PalletViewModel(...));
}
}
And then this in your xaml:
<ListBox ItemsSource="{Binding Shipments}" IsSynchronizedWithCurrentItem="True"/>
<Button Command="{Binding AddPalletCommand}>Add Pallet</Button>
This way you can also track the selection of the Shipments collection from your ViewModel and update the command's CanExecute state.
Does that help any?