I made all of @tridge's suggested parameter changes and I had my first successful hover this morning. I'm using earth-frame controls for hover. Here are a couple of things I discovered:
My leaning-forward takeoff position doesn't work. The thrust of the motors is pivoting the aircraft around the point where that front kickstand is touching the ground, and it doesn't have enough control authority to stop the rotation before it gets horizontal. After two attempted takeoffs from that position, we propped the aircraft up to near vertical (80 degrees) and had a successful takeoff.
Yaw control is good
Roll control is good
Pitch control is good, up to a point. The aircraft was hovering nicely for about 10 seconds. It was a little blustery, probably more than I should have attempted a first flight in, but I'm impatient. A gust came through and hit the underside of the aircraft, causing it to pitch forward. Despite full pitch-back input from me (and presumably the flight controller) it wasn't enough to get the nose back to vertical and it started to fly away, eventually pitching down to roughly 30 degrees nose-up (from forward flight attitude). I was in a relatively confined area so I put it in manual and released the controls to kill the motors.
Looking at my logs, it appears that about 25 degrees from vertical is the point where the pitch becomes unrecoverable, but I'm sure airspeed is playing a part. Once some forward airspeed develops, I think aerodynamic stability is going to try to pitch the nose down. Any suggestions on overcoming this? My two ideas are to increase the size of the control surfaces (which seems to be common), or to use a way aft C.G. so the aircraft is aerodynamically unstable in pitch, and rely on the FC to stabilize it in forward flight.
I'll post a video when I can get around to it; I need to get some actual work done before I can play with this project some more.