After some thorough testing looks like Garmin pulled magic one here.
While I do not believe issue fixed per se - it is very well masked to the point I can not put finger to. Thus I consider it fixed.
During my bike rides (indoor and outdoor) - all the data recorded non-stop and looks very valid. Yes, there are few things still needed testing - like I've seen "speed sensor connected" message several times, yet no drop-outs in speed graph (hint of masking the problem) - I still can't say there is anything out of place.
Yes, new height algorithm is not perfect and I do "jumps" up and down - depending on the GPS reception.
And yes - while HR broadcast works fine to my PC (zwift) - it does not work with bike computer (Nyterider Rebel 8.0).
In overall - respect to Garmin for pulling out this one, hope not that many people returned their watch prematurely.
Anything else I missed from "sport" part of watch?
(I am still having it jumping hour back occasionally, not great with music controls, and notifications stuck sometime, but that is "smart" part of watch)