Good description Graylight. I shoot the SDP and it is not set up with 3rd axis, however due to the exact issues you described, above, my 20 pin and 80 pin dont shoot the same line as the sight is set up with. It has the wire that supposedly shows your pins are in line and level. However I have set my pins different than the wire. the 20 is slightly inside it or right of it as i see it and the bottom pin 70 yard pin as i set it up, is slightly out of the wire or left of it.
So in a way, the pins adjust in left and right independently, and is a similar adjustment for a third level adjustment.
However, EBJ had a nice article about it all some time back. I read it, understood it, and found it more or less useless for 90% of archers.
A sight with only two axis of adjustment is plenty. As an archer, form is more important. Making sure you pay attention to every single muscle you hold during a draw and shot sequence plays the part of the shot, not so much the sight.
For example, I picked up my bow this last month for more or less the first time over winter. My bow and sight have sat untouched. It shot perfectly for me last season, however I was all over the place.
My shoulders and mid back muscles are not in shape, I shook, and my grip was random.
I started all over again going through the mental routine and started noticing all the form malfunctions I had from not shooting. Give me a month and some string time and I can work that out.
No sight on my bow can fix that.