When I take my shepherd walking/hiking on a leash, she behaves quite
nicely. When I am able to safely give her more freedom, I unleash her.
This is when the questionable behavior occurs: As soon as she is
unleashed she runs to the nearest tree and does what can best be
described as an intense "bark and hold," exactly like a schutzhund
trained dog would do with the bad guy. I usually continue walking while
telling her "this way," which generally causes her to leave the
particular tree and sprint in my direction but to the next tree where
she once again performs the bark and hold. Now if I don't give her the
"this way" command quickly enough, she will, after 5 -8 seconds of bark
and hold, attack the tree, chewing the bark off. This behavior will
continue until 1) we run out of trees 2) she tires, which is rare,
or 3) I put her back on the leash. Placing her back on the leash seems
to turn the switch off and we go merrily on our way. Unleashing her
flips the switch back on and she is off again to the nearest tree.

While she has seen other dogs perform this schutzhund trained behavior,
she has never been trained to do so, nor has she ever bit a sleeve. The
only thing that I can think of is that when she was a puppy she might
have chased a cat or squirrel up a tree.

I would certainly like to understand this behavior.

My 1.5 year old German shepherd is from working lines. I have been told
that her drive is an 8 on a scale of 1-10 (10 being the highest).
Because she doesn't have a real job to burn up all her energy, I keep
her very busy swimming in lakes, rivers, and creeks. We also spend time
playing "the game," as defined by Ivan Balabanov. Of course we also
hike. She is usually tired by the end of the day.