2D
I have a feeling we are talking cross purposes
In fact both devices resolve altitude in 100 foot increments from an external source and it is this which is displayed by default. This explains the need to enter or confirm the QNH on startup
The external source altitude is NOT displayed by default. What is displayed is the altitude from the GPS receiver (AUX1 screen). The output from the altitude encoder is not displayed.
The GPS altitude (displayed) is patently obviously not from an altitude encoder because they return the data in 10ft or 100ft steps. The displayed altitude varies in 1ft increments. Its availability is also related to satellite reception so you don't see anything for some minutes after startup and it gets more accurate as more sats are picked up. I can sit there and watch it, and have done so many times, on the KLN94B and also on the Skymap 2.
The current KLN94B user manual does reveal a somewhat obscure feature of the KLN94: altitude alterting (which I have never used and which on mine is disabled in the maintenance pages; I get altitude alerting from the KFC225 autopilot whose altitude reference comes simply from the P1 altimeter) - which does use the altitude encoder and for that the QNH must be set. Furthermore the QNH must be set when doing a GPS approach - you get prompted to enter it 30 miles out, it says. These KLN94B features really need an air data computer to work well and I've never used them. I believe the GNS430 has the same issues.
As far as I can tell, NO KLN94 function uses the GPS altitude; it is merely displayed in the AUX1 screen. This is as one would expect given that air pressure is used for altitude officially, not GPS.
RAIM integrity checking works by comparing the altitude portion of the GPS solution against an encoding altimeter; the idea being that if the GPS computation is wrong in lat/long then it will also be wrong in altitude and this method will pick up the error - this is a fair enough assumption unless the signal is being jammed is a very sophisticated manner.