Hi Hebog looking at your forum profile I suspect that you're not an aviator but maybe have some personal connection with this tragedy. No, your question isn't "silly" in the least.
Altimeter -- This simply measures atmospheric pressure just like a barometer at home. But instead of being calibrated in inches of mercury or millibars, the display is calibrated in feet of altitude. It's a linear relationship near ground level up to many thousands of feet. However, when we say 'altitude' we have to ask "altitude above WHAT?". The hills? The sea level? The runway?
For this reason an aircraft altimeter has an adjuster knob. When the pilot is about to start his engines he asks the control tower for the actual pressure on the airfield, in millibars. He then dials that setting into the altimeter and he expects it to read (nearly) zero. If it doesn't, he will not fly because the altimeter is the second most important instrument he has. Airspeed is arguably more important. This is drummed into student pilots from their very first lesson -- it is inconceivable that anyone would fly unless their altimeter zeroed on the airfield. It gets a little bit more involved after the pilot takes off but I think you can safely assume that the altimeter zeroed fine at take-off. This aircraft had two altimeters and there was a small difference between them but not a significant difference. -- There is no reason to think that the small difference had any bearing on the accident.
To answer your specific question whether the pilot could or would have mentally compensated for an altitude error the answer is NO. The pilot would adjust the altimeter, not carry out mental adjustments. Why would he? He has a knob he can use to set it to whatever he likes.
Sorry I can't help you with your other questions. I'm sure an experienced display pilot will help to explain.