When the InDesign engineers add a new feature (like Alternate Layouts in CS6), they usually have a customer need (or needs) in mind, and they try to implement as many of the ways this new feature relates to older features as they can.
The Alternate Layout feature, frankly, was intended primarily for designers who are creating tablet apps. Tablets can display both horizontally and vertically, and can have many different pixel dimensions and pixel ratios.
While this feature can also be used in print applications, that's what it was primarily intended for. I've demonstrated to classes how you can use this to create multiple size posters or flyers for print, and the feature works fine. However, I think you've run into an "edge case" that engineers didn't forsee.
I think the TOC feature was not part of their thinking nor their testing, and the two features appear not to work together. I'd suggest you file a feature request here:
Steve's take on this is interesting. Not what I expected. He's totally right, though - I looked at Alternate Layouts thinking I could use it the way you are trying to, but after a few experiments I blew it off, and since then have only used it for the tablet-publishing-related experimentation it seems to be meant for.
But in terms of solving your issue now: is it possible to pull this off using conditional text? I haven't tried it myself, but it seems like it ought to work. Apply a condition, update the TOC, export a PDF, apply the other condition, update the TOC, export the second PDF? Because it seems to me that the conditional text tool was made with your situation in mind, and I have used it in projects that had stringent requirements for the TOC.
Thank you Steve and Joel. Very interesting. I will first go ahead and ask for a feature request. I imagine in my mind that even if the alternative styles were for tablets, that if you had the need for TOC say an online magazine or something that would want a feature like that. I do not know much about conditional text. So, I will dust off my old InDesign books and try to learn it before posting another message.
Thank you both for trying though. I wanted to make sure I tried everything. Mike