Maps are ground track based. You want straight up to be where you are going, not where you are pointed. So if you point the map at the magnetometer, it makes it hard to fly to a point if there is any wind, since you now have to figure the wind correction angle. This is why we use GPS track, just like every other map out there.
We do hope to blend magnetic heading and GPS data in the future in order to get smoother updates, but this needs to be done carefully, and we haven't gotten there yet.
We think 5Hz is actually very good, and we can handle much more if we get the data source to do it. Most older maps (even a 430) can't update faster than 1Hz since that's as often as they calculate a track. Maybe someone with a 396 will chime in. That thing updates at about 0.2 Hz (every 5 seconds)!
As for GPS fail-over on the PFD, we continue our high update rate over there. We already blend the data between GPS updates, so there is no degradation in update rate.