The system will revert to speed now if you get high on the path or go into heading and get far enough off the lnav track.
It's been a while, but I seem to remember on the B733CL that if you selected HDG SEL while in VNAV PTH it tripped to VNAV SPD immediately. I can't remember about being high. (if I could remember it must have been lousy).
In my last NG if you were kept hi on path the VANV stayed in path, but the speed bug reduced to UP and the a/c dived for the path. The gotcha with teaching the newbies was they were fixated on the FMA which stayed in VNAV PTH, which was not totally true. It had the VNAV PTH captured and was trying to re-establish, similar to LOC CAP. Perhaps this trip to VNAV SPD and giving you direct control of the MCP and ROD is a thought to make the FMA more honest as the B733 CL was.