rgbrock1:
Is my understanding correct in that when an aircraft such as the Airbus 3xx-series enters alternate, or direct, law that in so doing the aircraft is being "handed over" to the flying crew in a less than desirable state?
In fact, you've got slightly muddled here.
As I understand it, when an Airbus A3(2|3|4|8)0 degrades from Normal to either Alternate, thence to Direct Law you're talking about the FBW flight envelope protections.
When you're talking about an aircraft "handing over" control to the crew you're talking about the FMS, aka the autopilot, which is a completely different beast and one which is not restricted to Airbus - incidents and accidents involving an autopilot reaching its limits and handing a barely-controllable aircraft back to the crew include the China Airlines 747SP over San Francisco, and the American Eagle ATR at Roselawn.
Will Fraser:
There was an AD late last year that addressed Prim reset after engine failure test in sim. At failure, a/c pitched to zero, disallowing pilot input, a separate power supply was installed on separate bus bar, as the a/c was not pitch responsive while computer reset?
Not sure what you're driving at here... Was this problem specific to the sim or an issue with the actual aircraft?