The manual says that for AG gun attacks the sight should stay mechanically caged and the impact point estimated. However, I find that uncaging the sight gives me a pretty accurate CCIP for the rounds (ground radar reflection?).
What do you think, would that me a valid case, or maybe just a glitch/beta thing?

Theoretically speaking, it's supposed to give you a correction for bullet drop. However, I'm not so sure it'd actually lock on to the ground.

Regardless, the range you have to be for it to start functioning is "extreme Hollywood" short range for strafing. It's too late to maneuver properly, but most of all you'll be flying through your own ricochets (there's a lot more of those than the few tracers that are still burning) and ground fire is almost guaranteed to knock you out of the sky.

As weird as it sounds that's exactly what it says to do for straffing with rockets and dropping bombs. So why not when using the gun?

Way different. When you do that, it's to allow the pipper to move according to pilot input, whereas what Dobby's talking about is employing the radar.

Theoretically, the radar should work reasonably well since it's adjusting the pipper for bullet drop based on the distance ascertained by the radar, but if and only if, you have the narrowest radar sweep angle possible. Because if you think about it, a wide sweep would would return a wide spectrum of different ranges (the shallower the angle of the approach, the worse the variation would be), where a narrow sweep would return a narrower spectrum of ranges and therefore be more accurate.

Ok, so I just gave it a try, and my theory doesn't seem to hold water (not in DCS anyway). I pointed my nose at the ground from a shallow angle, put it on active pause and played around with the sweep angle dial and it didn't change the pipper's behaviour at all. I was hoping my theory was correct and that a narrower sweep angle would cause the pipper to dance around less, but changing the sweep anglehas no effect on the pipper behaviour. It seems that there's only one kind of ground return, and that's the kind that gives you a broken light, and a dancing pipper. It doesn't seem that ground returns are really modeled in any detail. It's either ground return or no ground return.

Well I tried this yesterday, and with a steep dive angle, it seem to provide fairly decent impact point prediction. But that was a dive towards crest of a hill, so the angle between my dive and terrain was further increased, may be that made it more accurate. Pipper wasn't jumping/dancing around and wasn't blinking in size as it happens when there is cloud/ground interference.

Theoretically, electrically caging the sight for a second or two over your intented target should give radar a reference point to lock and range, especially if ground is more or less perpendicular to path the jet is flying. But for shallow dives I wouldn't expect it to reliable at all, and either have that jumping/dancing pipper, or an apparently reliable but actually inaccurate pipper.

When I bought the module during it's initial release, I realized I had a moving pipper for rockets and it seemed fairly accurate, obviously, I did something very wrong, most likely changed the sight mode to guns mistakenly.

Oh, and another thing I just remember now as I was typing, during the flight I mentioned above, I actually turned my radar range knob all the way down, essentially closed my radar, because I was flying with a friend who was in A-10C, and his RWR complained a lot, releasing it's countermeasures needlessly . So may be I didn't change that setting back when over the target, and if so, I guess my strafing run was on a pipper that provided a purely gyro solution without radar ranging, if so, that accuracy of moving pipper for strafing would more likely to be a bug than a feature.

The targeting radar on the Sabre is strictly A-A, not A-G. It doesn't display useful data via the pipper until it has locked on to a target. IIRC its maximum range is 400-500 yards, so even if it somehow could lock on to targets on the ground, you're going to be far too close for any safety. Though the -F version was able to, the Sabre was just never well suited to A-G.