How to make iSQL/FreeTDS behave like a normal client?
I have seen this before. According to the Sybase ASE Documentation:


  Adaptive Server Enterprise implements dynamic SQL using temporary stored procedures. A temporary stored procedure is created when a SQL statement is prepared, and destroyed when that prepared statement is deallocated...[a]s a consequence of this implementation, an application accessing Adaptive Server and using dynamic SQL is subject to the restrictions of Adaptive Server stored procedures.


However, I'm not sure if it's the unixODBC interface, or the isql tool, that is asking the ASE to treat these as stored procedures / dynamic sql.