Looks like it is working with latest dev changes and because my quad going to service and bad weather, it would be interesting to see if somebody could repeat results with other setups. So, I would try to explain latest changes in soft. and GUI and setup precedure.
GUI changes:
1) The baro currently displaying altitude above see level in meters.
2) The baro graph automatically scaled with range +-1 m, so you can see alt. variations quite preciselly
3) The Estimated altitude is displayed on top of baro graph, it uses the same scale as baro graph. So it is possible to see how baro data is smoothed.
4) The additional PIDs added to configuration area.
How it works:
Complimentary filter: Mixing data from baro and accelerometers, to get estimation of vertical speed and altitude.
Velocity PID: Uses estimated vertical speed and adjusts throttle to hold desired vertical speed.
Altitude PID: Uses estimated altitude and adjusts vertical speed (Outpud is feeded to the Velocity PID)
Setup procedure:
1) Set Vel. and Alt. PID values to the zero
2) Start increasing Vel. D. You should start feeling that quick throttle stick movements are dampened. Increase until really fast osculations starts in response on quick throttle stick movement. Than drop a little bit. My current value: 30
3) Start increasing Vel. P. Throttle response should be softer and softer and quad should start holding altitude. The tricki part here, that CF using baro data for vertical speed and it is fluctuating, but you can roughly assest amount from GUI. The good values for Vel. PID should give you the following behavior: After flicking switch the quad should stop and slowly drift.
4) Start increasing Alt. P. The quad should stabilize around set point. Increase until it start oscilating, the value could be really high: I have 20
5) Start increasing Alt. I. The stabilization should become more precise.
6) experiment..

It would be nice to collect statistics of working PID values, as we need to decide do we really need full PIDs for both Alt. and Vel. and probably re-adjust PID ranges.
regards,
ziss_dm