I don't have this issue where I work, but I would feel more comfortable if I saw the initial level and not the final level on the mode S.
I'm also thinking that if you go out of VNAV for whatever reason, doesn't that increase the risk of a level bust?
For example, PF decides to hand fly with no FD, for whatever reason there's a distraction in the cockpit. There is no "1000 to go" call or similar because the MCP is set above the initial level, this then leads to a level bust.
I'm just thinking that if the initial level is set then that's more of a "fail-safe" rather than "fail-dangerous" option perhaps? But then again I'm not a pilot.