Hi David.

The B727 did not come equipped with GPS from the factory (GPS didn't exist during its production run).  They have been retro-fitted though, and CS has silently implied that a GPS system may be provided in the future, as one is shown ahead of the control stand.

It will require a NAV/GPS switch, which I've not seen in the cockpit, and not investigated to see if one exists in the configuration.  We will maybe have to wait for the next manual to be released and/or the next SP to know for sure.

If you have a key set for NAV/GPS, you may wish to test this:

1) tune your NAV radio to some VOR or ILS that's nearby that you can receive a signal, and turn the course knob until it shows flight path deviation.
2) program the Garmin 500 GPS for a direct route someplace.
3) Press the key you have assigned for NAV/GPS, and see if the HSI deviation changes.

If so, then you can set this keypress to select the GPS instead of NAV, and use the VOR/LOC mode on the AP to track the GPS waypoint data.

I've not tested this, so I couldn't tell you if it works or not.

As for your FP questions-

The oldschool sperry AP in the B727 could only control pitch and roll.  It would not calculate pitch variance to maintain a vertical speed.

If you engage the AP shortly after take-off, it goes into hold mode for the command selected.  There are two commands on this AP, AIL and ELEV.  AIL being roll, ELEV being pitch.  You can't engage ELEV without AIL already engaged.

So, in our hypothetical situation... you roll out, V1, VR, pitch up ~10 degrees, hold it there thru V2, reach down and flip on the AIL/ELEV commands and let go.  At this point, the AP will hold your roll right where you left it (hopefully wing level) and hold your pitch right where you left it (hopefully still near 10 degrees nose up).

It will stay exactly like this unless you tell it otherwise.

So, how do you tell it otherwise?

There are two ways.  With the pitch/roll command knob to the left of the engage levers, or with the Alt/Hdg hold switches to the right of the engage levers.

If you turn the pitch roll knob left, the plane will begin to roll left, to the approximate degrees commanded on the knob.  If you nudge the knob forward, a few times, you will convince the AP to nose down attitude slightly.  Nudge it a few more times, and it will move a little more.  The difference is minor, it may take 20 "nudges" to change the pitch by 10 degrees, I've never counted to be honest.

This is where you're changing the vertical speed, but you must be PIC when doing this... your attitude and your airspeed will both affect the rate of climb/descent, so 10 degrees at 160 knots is not going to climb the same as 10 degrees at 250 knots.  And, since the VSI is broken on the plane right now  :'( you'll have to watch the altimeter and do some best guesses for how fast you're really climbing or descending.

The second way of telling the AP what to do is to use one of the hold switches.  Hdg Hold is what we're all used to from any AP, for the most part.  Click it on, and the plane will hold its present heading, and level the wings if it's banked any.  Turn the heading bug, and it will turn to that heading.  Alt Hold is sort-of what we're used to with any AP, but it says "at the very moment this switch is engaged, level the plane and maintain the altitude at that very moment to the nearest hundred feet."

To explain differently what I just said, let's take this example:

We're climbing about 1000 fpm towards our target cruise altitude.
As we get to 900 ft below (the Alt Alert chime sounds) we begin commanding the plane to slowly pitch nose down to slow the rate of ascent.  As we get within about +/- 49 feet from the target altitude, we flip the Alt Hold switch.  At this point, the plane finishes rolling out flat, and re-trims itself to hold that altitude as best as possible, regardless of how the airspeed rises or drops.

Or, you could climb 6000 fpm and flick the Alt Hold switch and the plane will continue climbing hundreds (or thousands) of feet above that, and then will begin to pitch down to descend back to that altitude.

So, If my target is FL230, I would command it to hold somewhere around 22,951 ft.  If I command it to hold before that, it will choose to hold 22,900.

So yeah, in short, there is no cap alititude setting (the altitude setting only sets off the alt alert chime and light) and there is no VS setting.  It's up to the pilot to tell the AP how to fly the plane.