The Ju88 also had an automatic dive-pullout mechanism - I have never seen it modelled (for Ju87 or Ju88) in any sim yet.
OK, Ju87s and dive-bombing. The idea of dive-bombing is to go down SLOWLY so that you have maximum time to get lined up on target accurately, and also to ensure that you don't break the plane and do pull out of the dive OK. When dive-bomnbing your engine should be idling (at very low throttle) not at maximum!
The automatic pull-out gizmo was a kind of fail-safe. Attacks would go in from a known altitude above target. In theory, a good pilot would follow the correct method perfectly and pull out in time. In practice, sometimes pilots misjudged and smashed into the ground, if they were trying too hard to get as low as possible at the point of drop. To help prevent this, they developed the automatic device, linked to the altimeter. It want there because the pilots might black out, but because they might misjudge their altitude. Once engaged, the autopilot would indeed pull the plane out of the dive at the right altitude, whether the pilot was conscious or not. However, I believe the autopilot could be manually overriden by the pilot.
The dive brakes (not flaps) on planes are often not the same as the flaps (there are a few exceptions where normal flaps double as part of the dive brake system, like on the SBD). Look at the Ju88 for an example - the dive-brakes are those grille-like things that drop down under the wings. The main give-away as to whether dive brakes are deployed or not are the indicator light on the dashboard for them and the fact that your speed isn't increasing out of control.
Hope that helps!
Esme