So for the Naza-M mode on the phantom 2, the rth altitude is always at 20m. So if I am flying at more than that, will it return at that height or descend to 20m? This is the only dealbreaker fo me switching to Naza M because most trees in my area are above 20m, as well as power lines.

The default is 20 m but you can set it higher.

No, it won't descend if you're higher.  First it'll rotate until it's pointing towards home.  Then it will fly straight horizontal line over home point.  Then it will descend straight down and land.  

Good luck