Hi Zuhaib,
Yes, you can use altitude hold by enabling ALTITUDE HOLD PITCH ONLY and Manually Controlling the throttle by pilot Transmitter directly without making throttle connection to the UDB.
Keep in mind that in that mode, the controls will attempt to maintain the altitude of the plane at the moment that switch into stabilized mode. So you will have launch in manual mode.
Also, if you connect throttle directly to Rx, the only option that you can use for altitude control in waypoint mode is pitch only.
Regarding the GPS, the accuracy very much depends on location, and whether or not WAAS is available in your neighborhood, and whether or not you are in a valley surrounded by mountains, or you are flying from a plain.
Where are you located?
Best regards,
Bill