Don't accept an answer that says don't use a feature. Another point to consider is that aircraft with a lot of dihedral will self-level.
I agree on both counts.
Please don't misunderstand me; I am not saying that the solution to this 'problem' is don't use the feature. I'll be more precise. There is no problem here.
Your second point above is the primary reason the plane is auto-leveling (dihedral). My advice to new pilots is not to use Intermediate Mode. ... not because there is a problem, so avoid the feature! My advice to new pilots is that the intended Intermediate Mode is really not helpful in training new pilots. Its not a specific model, and its not just the software. All of my physical models with Intermediate Mode (any STS trainer) behave the same way the software does; its not broken, and I did not intend to imply that it is. Its just not helpful IMHO in learning how to fly an RC aircraft.
My advice is to use SAFE 'select' to avoid a crash on take-off and landing. Then, turn off SAFE and fly with AS3X while up in the air... if there is a panic moment throw SAFE back ON, take a deep breath, and go back to AS3X. The Intermediate Mode works fine; its just not helpful, IMHO.
Now, dihedral is another kettle of fish entirely. My Apprentice STS will appear to auto-level because of its dihedral. Also, my Apprentice STS can be flown with just the tail... for the same reason. (all of this regardless of the SAFE mode that is selected). But, if the Apprentice is spiraling into the ground the dihedral will not be enough to pull it out by itself, without SAFE.
In any case, nothing needs to be reported to anybody about any of this in my opinion; there isn't anything to report!