Switching to standby is a matter of personal preferance and nothing more. If you're afraid of the 7's then don't dial them in.
Follow the instructions in the book that came with the thing or are written in your company's operations manual. Theoretically someone who knows something about your transponder wrote the instructions.
Whether or not the transponder goes momentarily to standby when you change a digit is fully a function of manufacturer's design and shouldn't be a concern of the operator. I've tested and certified myriad types and it seems that no two operate the same. Some go to standby when you change one digit, some transmit the new code as soon as a digit is changed, and a couple transmit the new code two or more seconds after the code has been changed. The transponders all have to meet FAA/JAA TSO-C74b [Mode A] or any class of TSO-C74c [Mode A with altitude reporting capability] as appropriate, or the appropriate class of TSO-C112 [Mode S] standards and are built to do so.
Mode S is the name given to a type of transponder (a unit that responds automatically to an interrogation) that may also act as an interrogator (a unit that automatically initiates an interrogation). It incorporates the features of Mode A, Mode C, and may interrogate other aircraft when needed. It identifies the aircraft being interrogated as well as the interrogating aircraft by an assigned code (in the US it's the N number). The S stands for "selective interrogation".
It's used in conjunction with TCAS to determine the relative altitude to your aircraft and, with the TCAS processor, the potential threat and Closest Point of Approach (CPA). If the target is determined to be a threat by TCAS the Mode S increases the frequency of target interrogation as the CPA is neared.
If anyone wants more information I'll be glad to cut and paste some stuff for you.
