The way we've run it so far:
We have a trollkin totemist 4/fellcaller 4 with a +1 LA. He's a 5th level character.
We also have a black dragon 5/sorcer 5, via a dragon mag monster class.
The trollkin took a hit to both classes, but he gets a feat every 3 levels, attribute every 4 four levels, as well as hp, skill points, and save increases at every level (ie: he has the HD, skills, and saves of a 4th level character).
The dragon, even though it looks like they get a boost, isn't so lucky. His spellcasting improves every level, but we ruled that his skills, saves, and HD will still raise as per the dragon (they're all the higher of the two classes). So he's got the hp, skills, and saves of a 3 HD critter.
We also ruled that since he is taking a monster class, he follows the rules of that situation. So he doesn't get the feat every 3rd level or attribute bonus every 4th level. He gets what the monster class allows. As for as feats go, he has the fewest among the party. And while he does get some significant attribute bonuses, he doesn't get to pick where they go. He's not going to have a charisma increase any time soon.
My two cents...