Would a D level sim programmer have to model the IRU's to this sort of detail level?
Absolutely. If the aircraft does it, then the sim needs to to be a useful training tool.
When I made the comment about ATT, I was thinking of the case of the IRU being switched from NAV to ATT, which is a slightly different case. In this case the platform has already been aligned. In your case the platform is forced to align while in motion, which is less accurate, and further degraded by acceleration of the aircraft. Once again, I would expect the sim to reflect this.
In my parlance, the Nav Solution is aircraft position, velocity etc calculated from all of the various nav sensors. By selecting ATT, that particular platform is removed from the calculation