Progressive sequence model refinement by means of iterative searches is an effective technique for high sensitivity database searches and is currently employed in popular tools such as PSI-BLAST and SAM. Recently, a novel alignment algorithm has been proposed that offers features expected to improve the sensitivity of such iterative approaches, specifically a well-characterized theory of its statistics even in the presence of position-specific gap costs. Here, we demonstrate that the new hybrid alignment algorithm is ready to be used as the alignment core of PSI-BLAST. In addition, we evaluate the accuracy of two proposed approaches to edge effect correction in short sequence alignment statistics that turns out to be one of the crucial issues in developing a hybrid-alignment based version of PSI-BLAST.