"In the case I quoted if the "unknown traffic" had talked to the ATC unit and had his mode C readout checked there would have been no conflict (his altitude might have been capped for a few miles)"
I agree, A&C. However, one thing that must be borne in mind: In your example, had the pilot chosen to speak to ATC, he was in Class G so ATC could only have REQUESTED that he cap his altitude. The problem comes from controllers thinking they are entitled to control aircraft operating in Class G. They can't. Once a pilot has been inconvenienced a few times (not that capping an altitude normally is, unless the pilot is wanting to climb to MSA due to decreasing weather conditions) he begins to think that the next time he won't bother contacting ATC.
If a controller or CAT pilot is unhappy in those circumstances, the CAT must be vectored or held high. This is a commercial consideration and not normally a safety issue.
However, GA is generally the easy option - the pilots don't have much clout for comeback if they are routinely inconvenienced or put to greater expense by delays caused to them to please shareholders of an airline. An airline has the ability to increase prices. A GA operator / private operator often has not.