RE: alt hold problems
As you've guessed, it's not supposed to act that way :-)
Are you engaging the AP during a climb and then quickly selecting alt hold, or flying by hand using control pressure to maintain pitch instead of trimming?
First check would be to take-off and level out at 5,000ft adjusting power and trim to be able to fly level and hands off, then engage the AP - at this piont you should still be flying level at a near constant speed - now engage alt hold ...... on the AP and not the FD controller on the glareshield.
Let me know what happens, and if it's bad, give me details of exactly what you were doing beforehand, weight, speed etc. Doing a forum search shows nobody else is having this happen so we just need to find out a bit more about how you're abusing our airplane :-)
Dreamfleet/Flight1 727 & 727X Developer