I am not aware of any requirement that the GPS CDI Full Scale Deflection (FSD) sensitivity be set to 1 NM for a hold. Just a comparison between a GPS and the VOR FSD would not indicate that it would be necessary. A non WAAS GPS has a FSD of +/- 1 NM when in the terminal area (within 30 NM of the departure or destination airport) and +/- 5 NM when enroute (outside of the terminal area). A WAAS GPS enroute FSD is +/- 2 NM. A VOR FSD is +/- 10 degrees.
If there were a VOR located at the airport, at 30 NM from the airport a VOR CDI deflection of 2 degrees (1/5th of full scale) would be equivalent to a GPS deflection of +/- 1 NM. In terminal mode, both the Non WAAS and the WAAS GPS would be full scale and therefore be 5 times as precise at this distance. If instead the GPS were in enroute mode, a non WAAS GPS would also be (1/5th scale) and a WAAS GPS would be 1/2 scale, so for the Non WAAS GPS, the CDI sensitivity would be the same as the VOR and for a WAAS GPS the CDI sensitivity would be 2.5 times greater than a VOR.
The pilot would be expected to be in terminal mode when within 30 NM of the departure/destination airport and in enroute mode when outside this distance. If a flightplan has been entered into the GPS, the mode switch will occur automatically.