This is one of those old chestnuts and reminds me when instructors use to tell "students" to switch off their transponders in the circuit or any where near a "big" airport.
From my point of view you would be absolutely nuts to do so. Some of us have TAS (TCAS) and love you to death for squawking mode C (or even A) in the first place.
It is quite possible with some transponders for the altitude encoder to be "out". I believe the rules have changed yet again on how often the encoder is checked and calibrated and are different between the G and N reg. regimes, however it takes all of 5 minutes to ask any unit to confirm your height. Simply say you want to to check your mode C and ask them to verify your altitude.
I dont see a great deal of point flying within 100 feet or at the same level as CAS, but if you do and your transponder was inaccurate, you have done nothing "wrong" in any event. If your "infringement" is by 100 feet AT will more than likely ask you to confirm your height or point out that you are "just" infringing. Clearly if you altimeter indicates otherwise and you have the correct pressure set you have not infringed and should only need to confirm your correct height and pressure setting. I have had a few periods with an "old" transponder that regularly "played up" and had a defective enconder. Although it appeared that I was at the "wrong" height it never caused a problem with AT and of course it was fixed although rightly they pointed out that the transponder was inaccurate and its use was certainly not to be encouraged within CAS were understandably it caused more than a little concern.
Take note that it is also quite possible that your altimeter may not be correct since it was last tested.
If you fly with TAS and aircraft are squawking mode C I can tell you the technology is first rate. Even with numerous aircraft in the circuit I can "see" every aircraft and it is a significant asset. Yesterday, just as an example, the circuit had just two in both squawking mode C and from 20 odd miles out when I first took an interest in the circuit traffic I could see exactly where they were and identify the aircraft asked by AT to orbit on final. Slotting myself into the pattern to ensure both aircraft had plently of room to complete their approach and the other to roll out was straight forward and I guess made life a little easier for everyone.
In short if you have mode C please do not turn it off in ANY circumstances.