Inertial Altitude can only be referenced to where the INS/IRS was originally 'switched ON'. The Earth isn't a perfect sphere; hence, if you were to compare, for example, two different Earth locations; one at Nairobi and the other at say London, there would be a difference in height of some 5000 feet.
Space vehicles, such as the 'Space Shuttle' will obviously use that extra INS/IRS 'dimension' i.e Inertial Altitude for the calculation of orbits etc. I'm certainly not a rocket scientist, but unless a correction factor can be entered into the height calculation then it couldn't be used for accurate 'height/altitude keeping', because many (all) other aircraft must reference their height/altitude systems to a common reference i.e. Atmospheric Pressure. With 29.92 (1013.2) set, all aircraft are then singing from the same Hymn sheet and won't (shouldn't) bump into each other!
As 'Intruder' suggests, Inertial Altitude data might well be utilised in the 'smoothing' of the IVSI data.
Inertial Altitude is, certainly, a very interesting concept; however, for the reasons previously stated (the Earth not being a perfect sphere), it's use is perhaps only accurate for extra-terrestrial navigation purposes i.e. a trip to the Moon.
TCF