To be able to do alternates you need to learn about OpenType. I started with Font Lab's User Manual.
That may seem like a big chunk to chew on, but there's a lot of help online. Some starting points:
http://www.microsoft.com/typography/default.mspx
http://studio.adobe.com/us/type/main.jsp?xhtml=opentype/main
And our own "Build" section of these boards.

My original idea was to not worry too much about making a good type face and instead to develop a solid understanding of mechanics of font development. Now I'm somewhat intimidated by the amount of stuff I need to learn. Also, any critique on my handwriting font as a font?

I take it I should try my hand at a real font if I want feedback?

Noah, handwriting fonts can be a fun project to start learning about font-making but unless your handwriting is exceptional, it rarely makes an interesting font. There are already loads of fonts like this readily available, but maybe there is some demand for one with contextual alternates (but i wouldn't bank on it!) If you like this project, keep at it, but I'm not sure anyone will appreciate it quite as much as you will.

Fair enough :-) that's pretty much what I though