As an answer to your real concern, not seeing the reversal, that is why there is a Zoom command.
When I engaging an opponent and I am further than 1-1.5K away, I hit the Zoom key (mapped on my stick) so that I can watch what the bandit is doing. It's set to different zoom levels depending upon my aircraft as I don't want 100% full zoom, usually around 75-80%.
Anyway, upon getting close enough to see the bandit's wings without Zoom I pop back into default view mode. I often pop in and out of Zoom on the closure to do a 360 check for bandits on me, then back on my target.
I never, ever shoot from Zoom mode, as I hear some people do. Visual shake is too pronounced that way.
As for the HO situation described, you never mentioned what the planes were, which might factor in deciding to do a vertical HO or not. Also, the tactical situation is important to know such as were you alone in the countryside 1 v 1, or were you or your opponent possibly defending a base with others and outnumbered? All this can determine why someone who knows how to fly and reason tactically might decide to do a vertical HO.
For example, last night I popped Paccer in his uber Tempest as he dove on me from 5K+ above and behind. This also occured over my base while under attack from a CV for the better part of an hour, with Paccer and a couple others bringing non-naval planes occasionally from an adjacent base. When we all saw the Tempest we knew it was Paccer as he'd gotten shot down several times previously off the carrier.
At that moment I was in a HurriC at 2K or so near our base. Our guns were equal (4 Hispano's each, which also is a factor) and, knowing he would scream in and do some unbelievable turn in his Uber plane to follow my evasion (it's just about his only trade in stock), I decided to go for the 50-50 engagement. I waited and watched carefully as he closed from 5K away. At first I played like I was jus barely turning and at the same time trying tp climb slowly to get alt, but early on I went nose down in the turn, re-gaining speed and watching him all the way.
As he fully committed to the attack, I pulled down/around and up into him with plenty of E to hold for a steady shot at 800m and blasted him out of the sky. I suffered a lost landing gear in return, a nice trade in my book, being close over my base.
This is not something I do often, but is just one trick in my book that I use when the time is right.
And in actuality, I don't consider this a true HO merge. This is answering an unavoidable attack with a reversal to a front-to-front aspect shot for both planes. To me, an HO situation is defined by both planes holding front aspect on each other for 2 or 3 seconds at the opening of an engagement, with little or no initial advantage to either plane.