The problem in your case is that the ContentTemplateSelector is called only
when the containers are generated (this is the default behavior of all selectors) and that's why it's not triggered on property change. If you want to be able to change the ContentTemplate runtime you'll have to bind the ContentTemplate property of the RadTileViewItem to the Template property in your business object (you'll have to use a converter).
I've attached a sample project so could you please examine it and if you have further questions feel free to ask.
the Telerik team