We study the dynamics of discrete vector solitons in arrays of weakly coupled birefringent optical waveguides with cubic nonlinear response. We start with a modulational instability analysis, followed by approximate analytical solutions in the form of strongly localized modes. Next, we compute the effective Peierls-Nabarro potential for these modes and obtain the spatial average of the power transfer between both polarizations modes as a function of their relative phase. Finally, we combine the concepts of polarization mode instability with discreteness-induced beam trapping by the array, and demonstrate numerically the amplification of a weak signal by a strong pump of the other polarization, combined with simultaneous discretized all-optical switching.