You're right about the wild range of motion. It seems to work properly when aiming directly up and down. I think it was stated that free reticle will double as free look and allow you to look beyond where you can shoot.
Have you tried maximal range without free reticle, but cl_free_reticle_independent set to 0 on mechs with limited torso twist? I remember it working fine on them. I'm back home and my main rig is still fried, so I can't test it myself right now.