If you set an MCP altitude higher than your your planned descent path and engage VNAV (Vnav descent now),you aircraft will go into an Energy Compensation ,reducing your airspeed .If the speed reaches a too low value,vnav will disengage as it wont be able to recapture your vnav profile.
Energy compensation only occurs when the aircraft has captured an altitude (set in the MCP) and consequently drifts above the VNAV profile - nothing to do with this situation. (Yes, I know what it says in the manual - very poorly written.)
The recommendation to set alt alert when 300' below the missed approach altitude is simply to prevent an inadvertent altitude capture.
In the circumstances supplied - in ALT HOLD, set the MCP to a higher level, push the VNAV button - if the FMC is between the FMC target altitude (depicted on the LEGS page) and the MCP target altitude (as in this case), VNAV will not engage. (FCOM 4.10.5)