I've had similar issues to Ben, and have also been following his posts as I've wanted to sort my Nighthawk out too. Can confirm it's not the camera. Stock PID's are very jittery. I think it's just a case of taking a long time to dial it in to your liking.
I'm still playing with my PIDs. I think Ben might be better off dropping his P pids and upping his I and D to make it more docile and reduce the jitter a bit. At least then he should have a flyable quad that can be slowly brought upwards. Alternatively drop the Pitch, Roll, and Yaw rates too so it's more docile, and just drop P a fair bit. (if I'm thinking of the values in the right way!)