Hi,
I tryed your example but not working mode change.
I have below changes in your exmplae - "Local header filtering".
1) Add html part
<select id="andOrFunc"><option>Select Mode</option><option value="OR">OR</option><option value="AND">AND</option></select>
2) javascript
$(document).on("change","#andOrFunc", function(){
var grid=$grid.pqGrid("getInstance").grid;
grid.filter({ oper: 'replace', on: true, mode:"OR" });
})