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This thread is resolved. Here is a description of the problem and solution.
Problem: How can I display all content for all languages using Fallback?
Solution: The fallback option only works for posts created in the default language. So, if you don't translate a post that is created in the default language, the secondary language will fallback to the default language. It does not work in the opposite direction, however. So you can't fallback to a secondary language if the post is not translated to the default language. So as far as your example goes, $fallback_language = default language. Fallback language cannot equal anything other than the default language. I hope this makes sense.
You can use this setting on any custom post types by going to WPML -> Translation Management -> Multilingual Content Setup.