Once Autopilot and one or more of the AP options (eg LNav \ VNav \ Heading Hold \ Altitude Hold etc) have been activated does simply moving the yoke deactivate AP or does the yoke need to be held to an extreme position for a small period of time prior to AP becoming disengaged?
A big difference between Airbus and Boeing here. In the AB, moving the joystick will cause the autopilot to disengage (though that is not the recommended method...that's what the disconnect button is for). In the Boeing it won't relinquish control and will fight you for it. I don't know what happens if you put a large input in and hold it, but even a small roll input required a lot of force. I never put in enough for it to disengage.
If yoke movement disengages the AP, does it disenagage the whole AP system, or just the part of the system which the pilot is trying to override (eg if the pilot had both heading hold and altitude hold on and they pulled the yoke back to increase altitude, would heading hold remain on and only altitude hold disengage or would heading hold also disengage)
In the 747/767, the a/p is either engaged or not...never in just one channel. The A380 is the same, but I believe that the earlier ABs (300 and 310) would disengage in one channel only, if you moved the yoke. It was implicated as a part of the cause of the Aeroflot A310 crash.
I was going to write "PS I realise that the normal method of adjusting altitude to climb another step would be to enter in the new altitude in the FMC or set the V/S on the MCP" but is that actually the correct method, or are manual climbs up to crusing altitude or stepping to a higher altitude done more frequently by hand than I realise.
It's never done manually. In the 747 and 380, just select the new altitude in the MCP window and push the dial, and the altitude will be transferred to the FMC, and the aircraft will climb. Whilst V/S could be used, (as could FLCH or open climb), its use is somewhat dangerous. The aircraft is being told to maintain a vertical speed, and it will do so as the first priority. Once it reaches max available power, the airspeed will be sacrificed to maintain the V/S...but the speed is the important parameter. Taken to an extreme you could stall an aircraft, but most likely would be that you simply will get into a situation where you no longer have the performance needed to either climb or to accelerate again. V/S is appropriate down low, especially when you have combinations of speed and altitude changes. Any of the other modes are more appropriate.
It is a bit of a hold over from the older aircraft (like the 747 Classic), in which V/S was about the only mode that worked properly, so it was used all of the time. In the electric jets, there's just no need.