If a failsafe happens the drone no longer knows here it is. It needs to land as soon as possible. By using altholt you force it to be in the air. At some point it no longer can stabilize the copter and it falls of the sky. AFAIK That is why it hits the ground harder in AltHold than in land.
I agree quick landing is best option when failsafe is occurred.
My question is why AltHold option is provided if drone cannot stabilize on the EKF failsafe.
If copter cannot stabilize without GPS, I think it is better to remove AltHold option in the EKF failsafe option.
Please let me know what I misunderstand, and any background history.
Thanks