[quote=
So you are going to need a way to measure altitude in order to hold a fixed altitude while hovering.[/QUOTE]
IR or Ultrasonic range sensors...
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I agree with the AVR option. I've started using them for the same reason(s). Free C compiler, lots of application notes, software examples (assembly and C) and development hardware is cheep!
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Thats the problem I had with 16 series pics when I started working with pics: no free C compilers. So I started using 18F series pics and used the RC code as a guide to make mine work. After a while I finally got a 18f458 to run a servo!