What actually happened here is that the AFDS captured the low leveloff very early (evidence FMA VNAV ALT). The AFDS sub-mode (not displayed on modern Boeings or Airbusses) is V/S. In this sub-mode the AFDS tries to follow a parabolic arc to level off at the captured altitude using pitch control. The A/THR has speed but is respecting only the low speed limit. VFE is ignored in this submode.
You may be correct for the 777, but not for the 744, according to the books I have. VNAV ALT is a VNAV mode, not a V/S mode, and the autothrottles go to SPD mode when VNAV ALT is captured. Target speed would be MCP speed if the window is open, or FMS commanded speed (could be V2+10 or accelerating, depending on altitude) if the window is closed. The FMS still provides high- and low-speed protection when the MCP speed window is closed.
PJ2:
The autothrottles don't "see" anything on their own. They are controlled and limited by the FMC.
In FLCH the speed is controlled by the MCP window, since it opens automatically when FLCH is selected. IIRC, flap limit speeds are not honored when the MCP speed window is open.