The reason why Altitude Hold did /does not work, in say the C172 Steam, is because the AP is using the Pressure Reference from the TRANSPONDER, and not from the AP.
ie Adjusting the AP Baro make NO Difference to the AP altitude.
If However, you press the B button, all 3 baros get set, and then AP Altitude appears to work, because the B button also set the Transponder Baro – which it really should not, as the Transponder Baro “should” be fixed and calibrated on the ground by the Aero techs… NOT the pilot.
ie The Transponder should always display FLIGHT LEVEL, not actual ALTITUDE above mean sea level
It would hep a lot if the SDK defined which Baro Index, the Kernals AP code used !!!