A bit of a misunderstanding, Level, I think. All mode C transponders report level
assuming ISA, that is, as a flight level.
You are correct, a slip of the pen on my part.
However my point was that, as far as I am aware, all Mode S transponders
in GA aircraft have an LCD display which will/can show the FL being transmitted.
So a pilot could see if their their transponder is sending out an incorrect
value (especially if way out).
The older, twiddle a knob, transponders do not have this facility and
the pilot would therefore have to assume/hope that it is functioning
correctly. Once in contact with an SSR unit if the transponder is
misreading then they are likely to tell you smartish.
If you read the Incident Reports there are quite a few cases of pilots
flying perfectly legally below controlled airspace, but their transponder telling
ATC that they were up, without clearance, in their controlled airspace.