Hijack always 'removes' any application that is not waiting in the WAITMENU ioctl from the menu. So as long as gpsapp is 'running' it won't be in the menu, as soon as you put it back to sleep on the ioctl you can see the entry again.

You don't see the gps menu entry because gpsapp is still running in it's main loop and hasn't returned to waiting. Hijack forgot about the active overlay and removed/overwrite the button and screen redirections.