I.e. unless either the auto land or hold buttons are pressed, the direction shown isn't updated with the actual data and thus doesn't make any sense. This rather defeats the purpose of this feature.

Heh, good catch. I'll see about fixing this.

This should be fixed by the above commit; check it out in the dev build if you want: http://jenkins.mumech.com/job/MechJeb2/lastBuild/