After writing it up as a bug, I was asked to check my work by the powers that be.
I did some some extensive testing and the horrific autopilot banking issue seems to be tied to the “Attitude Cage” knob on the gyropilot control panel.
If you’re feeling up to it, ensure the attitude indicator is, indeed, uncaged and test the autopilot again. For sure, with it caged, the AP will not work correctly.
If you still have issues with it uncaged, I’d appreciate you reporting back your findings.
Here’s the bug: