No - we can't see you when you're squawking standby. The example you quote is interesting because what the ATC unit is saying (if that is what they are saying) is wrong. You should be being told to squawk 7000.
"Squawk Standby" should be used when you're joining the circuit and it means exactly that - the standby switch and not, as many PPL's assume (incorrectly), 7000 but still emitting.
As for your second point - it should be 7000 with mode 'C' (if you can) unless you're in the circuit. Have a read of
Redhill and Gatwick.........
CM