Best settings to tune for 'spiky' thrust on takeoff?

Hello everyone!

Problem: Thrust is very ‘spiky’ immediately on takeoff and takes 5-10 seconds to smooth out.

Question: What setting is the best place to troubleshoot this?

Overall my quad H frame is flying well, but I’m running into an issue on takeoff and altitude changes (when flying alt hold or position hold modes). It’s equipped with lidar so it has great altitude hold in general, but thrust is very spiky immediately on takeoff and when commanding an altitude change.

My working assumption was that it was an issue with the MPC_Z_P setting, but changing it up and down from the initial setpoint doesn’t seem to have much effect on the vehicle, so I’m either outside the right range or working on the wrong setting.

Any suggestions on the right setting to focus on?

Logs and additional information
MPC_Z_P = 0.2:
MCP_Z_P at 0.3:

Frame: Quad H frame, 18" propellers (hence the low Z-P value)
MCP_Z_P values tested: Typically fly at 0.2, tried 0.1 and 0.3 with only minor difference in outcome.