Sorry Simjock but that is absolute b*****ks. The TCAS has no effect or autopilot mode in anything that I have flown. The main difference between Mode A and C returns as far as TCAS is concerned is that an A return cannot be 'resolved'. TCAS is only able to offer vertical guidance (at present) and therefore if a 'threat' has no altitude data attached to it it will only be shown as 'proximate' traffice i.e. "Watch out buddy, there's a plane over there"
The TCAS system filters out (dependant upon mode selected) aircraft that present 'no threat' which are separated by at least 2000'. The system still looks at all of the returns and assesses closure rate and conflict liklihood based on a little protective bubble around the a/c called a Tau. When a threat is first encountered it will be observed usually as a yellow circle with accompaniny altiude difference and the aural "TRAFFIC" message. The next phase is a full RA or Resolution Advisory where the climb/descend instructions are given. Ergo the system works on closure rate. If you are outside of the Tau and no accelerating towards it there will be no message.
Main point: Without altitude data the system cannot resolve a conflict nor can it filter 'unwanteds' out. The system reverts to a safe option of announcing the altitude-less threat with "TRAFFFIC". This means that on a busy Saturday one can be flying around with "TRAFFIC TRAFFIC" harping on. If you have altitude reporting and you intend to use your transponder, turn it on.
Cheers!