Hi ,
I spent some time looking into this again today, and while I can see the vertical jittering in the project that you provided, I was unable to recreate it in a new project. I talked it over with someone else, and we think there may be some interaction with code in the Engine that is intended to prevent gimbal lock. However, we aren’t sure where this interaction is occurring.
I am currently attempting to build up a copy of your character class in a new project, one piece at a time, to see if I can reproduce the issue there. It may take a while for me to be able to complete that process, though.