@Coop Thanks for the feedback!
I noticed that the dataref sim/aircraft/autopilot/preconfigured_ap_type is 6, which is "KAP-140 dual axis". Shouldn't it be 7 (KAP-140 dual axis with altitude preselect)
from https://developer.x-plane.com/datarefs/ :
0=X-Plane custom, 1=Airliner, 2=GFC-700, 3=S-Tec 55, 4=S-Tec 55 with altitude preselect, 5=KAP-140 single axis, 6=KAP-140 dual axis, 7=KAP-140 dual axis with altitude preselect, 8=Piper Autocontrol, 9=Rockwell/Collins FCS-65
Although I'm not sure how that would be the problem at hand.
Additionally, researching the KFC 225, I noticed that the VS and ARM buttons have switched places. (see https://www.bendixking.com/en/~/media/bendixking/files/006-18035-0000_1-kfc-225-ki-525a-pilot-s-guide.pdf for example )
From the above mentioned guide, I also found that UP/DN doesn't actually change the altitude mode