Not really sure, but according to what I have found here, it should be possible to clear a fixed altitude setting by adding the following fragment to nmea_init (gps_nmea.c, line 432) after the other zodiac init strings.

memset(buf, 0, sizeof(buf));
dat = (unsigned short *)buf;
dat[0] = 3; /* serial number, should increment XXX */
zodiac_send(1219, dat, 6); /* 11 - 5 */