Hey Icarus.
I do not think I know much but I can tell you about my crashes I have had, the funniest part is it all has something to do with me. I can say this reading over your post I feel for you. The W-MK is a very fickle unit if the proper channels are not taken.
When you were saying that the wobbling kept grow as the unit was fighting to get into the position that does sound familiar to me and what I would ask from my experience is.
1). Did you calibrate the GPS unit. if not that would be a good start, What could be going on the GPS does not know where it is from the unit (or its center point) and its fighting itself to get into the proper place (see question 2), if it thinks that the position you told it is and it is not where it is then some of the movement needed to get into the proper place may be taking it into another direction, and I do not think it likes that much. The other day I was playing about when I took a little spill from a few feet up, basically I ran my battery down, on purpose for a flight time test but the copter got turned upside down. The next time I went up I had a heck of a time controlling it. I have no idea why but it was flying in a hybrid mode, somewhere between manual and GPS, either way I was not sure if I was going to get it down in one piece. I stayed with it and ended up OK. I recalibrate the GPS and took off again, although all my problems where gone I kept it on a short leash.
2). X Y Z offsets, make sure you have their coordinate system properly orientated, I have a pretty good understanding of the three axises and over the years I have found depending on the engineering team involved they may implement a different orientation then you are use to. DJI looking at the image of the X Y Z numbers may not be as they seem, unless you take a very good look at their diagrams, this is something I did when I first configured it. Looking at the diagram on the screen of the software I thought x going to the back of the copter was a positive number but its not, its a negative. I had the y right but even more confusing to me was the Z when you place your antenna upwards above the CG that is a negative number on the z axis. So if this is not right then what you may be doing is telling you flight controller that the GPS is in the back when really is in the front and the corrections to make that work is totally opposite, and eventually the unit will be so far out of sorts something like you described may have happened.
On your hand set transmitter, ya if you do not drop the stick after you turn it back on then it will not engage with the receiver, its a built in safety so people will not turn on the controller and find their RC model whatever running away. Warning if you implement fail safe with the power off then once you turn it on drop your throttle all the way down to engage the receiver and cut off you alarm, get the throttle right back up to the a hover position or pretty much the middle of its range. If you do not do this your unit may cut the engines three seconds after that happens, or drop out of the sky because of the low throttle setting
Also since your unit did not go into RHM which sounds like a good thing, you may have the loss of power setting wrong, in the software auto pilot section there is an option for fail-safe mode. Since you said that it unit slowly started to climb, that may be a fail-safe setting in your transmitter adding just a little more power then is needed to hover. Check the transmitters manual to set that. Going back to the auto pilot there is two options, hover (where I believe you may have been) or return home where the unit will climb up to 20 meter wait 30 second then drop down, since that did not happen I believe you were in hover.
Also make sure that you have GPS lock before you leave the ground on this option because if you do not have the lock, then after you take off and you are about 10 ft off the ground when lock kicks in, let say maybe in one of my cases, then when you active the return home option the copter will go back to where it felt was the initiation point before cutting off the motors (ten feet above the ground). Not good, let say I have not activated that option since.
You may have done the things I mentioned above and what I am spitting out here is mainly related to things I have seen or got nibbled or bitten on.
I hope what I post may be helpful, keep at it and good luck. Last note until you step through all the functionalists and understand them I would keep my unit as bare as possible just to make sure everything is right, then you have lessor chance of more expensive/damaging crashes.
cheers Jack