the mobs bouncing has to do with fixed z which is broken atm.
from features.h..
Code:
//THESE ARE BROKEN RIGHT NOW:
//enable these to prevent mob hopping when they are pathing
//#define FIX_PATHING_WHEN_MOVING // expensive but accurate
//fix Z on sendto as well, if you still have hopping problems.
//#define FIX_SENDTO_Z