First stab at find_and_modify for MongoEngine. Can be added to mongoengine/queryset/base.py. NB As yet untested...

base.py

    def andModify(self, upsert=False, sort=None, full_response=False, **update):
        """Perform an atomic update on the fields matched by the query.  Returns
        a document.  Essentially a wrapper for PyMongo's find_and_modify; itself
        a wrapper for MongoDB's findAndModify.

        :param upsert: Any existing document with that "_id" is overwritten.
        :param sort: a list of (key, direction) pairs specifying the sort order 
            for this query.
        :param full_response: return the entire response object from the server.
        :param update: Django-style update keyword arguments

        .. versionadded:: TBC
        """
        if not update and not upsert:
            raise OperationError("No update parameters, must either update or remove")

        queryset = self.clone()
        query = queryset._query
        update = transform.update(queryset._document, **update)

        # If doing an atomic upsert on an inheritable class
        # then ensure we add _cls to the update operation
        if upsert and '_cls' in query:
            if '$set' in update:
                update["$set"]["_cls"] = queryset._document._class_name
            else:
                update["$set"] = {"_cls": queryset._document._class_name}
        try:
            result = queryset._collection.find_and_modify(query, update, upsert=upsert, sort=sort, full_response=full_response)
            if full_response:
              if not result['value'] is None:
                result['value'] = self._document._from_son(result['value'])  
            else:
              if not result is None:
                result = self._document._from_son(result)  
            return result 
            
        except pymongo.errors.OperationFailure, err:
            raise OperationError(u'findAndModify failed (%s)' % unicode(err))

Not sure you need to do the $set on _cls as the query part will match that