I am guessing that this is normal.
That is not
I'll guarantee that if you pull aft on the tip of the rudder (when locked down), it will travel back some distance before you feel significant resistance. What's happening is that the plate (adjustable rudder castings) or the pin (old-style rudder castings) is not seated in the "crook" of the cam. When you pull back, or hit bottom, it slides forward, seats firmly in the crook and rotates the cam.
When you pull straight up, the plate (or pin) is far enough aft that the "finger" of the cam flexes enough to let the tiller arm go without rotating the cam.
If you have the adjustable upper rudder castings, it's an easy fix. Just adjust the plate forward a bit.
If you have the old style castings, you'll need to fill/re-drill the upper hole in the rudders. Try moving the center of the hole forward and up (about the the 2 o'clock position when looking at the starboard side) about 1/4". The new hole will overlap the old, so use a small diameter bit to drill a pilot hole first.
Thanks for the detailed explanation, Matt. We're having exactly the same problem with many of the H16s at my club. We don't have any Hobie tools, and people don't know how to pop the cams with the mainsheet. So we keep wearing out our cams.
Are there any recommended procedures for checking, adjusting and, if necessary, repairing the cam setup and rudder casings? While we're at it, I'd love to check the alignment, incl. weather helm, of all our rudders. Any tips or instructions for that?