QUOTE
Taken from there, it implicates that the error will be greater when you're flying up higher; is that the correct assumption?
UNQUOTE
Yes, and that is one of the reasons why there used to be 2000ft vertical separation above FL290. This was to ensure that inaccuracies in pressure altimeters, including those introduced by colder than ISA temperatures, were not critical. As you may know, we now use only 1000ft vertical separation above FL290, and part of the certification process for an aircraft to operate in that airspace includes Air Data Computers which compensate for the temperature and ensure that the aircraft really is flying at the correct level.