Not that I have a clue but until someone who knows what they are talking about comes along I may as well chip in - it'll cause an argument if nothing else and my Met revision is boring me!
You talk of ISA conditions. Remeber that ISA is not only a temperature but also a pressure. When we pass the transition altitude and dial up 1013, that is when you have the mean altitude if it were a standard day. Until then you work with the air pressure that day. Were it a standard day then you wouldn't change anything on the altimeter at the TA.
QNH - remember Nautical Height (thanks Bristol) gives the height of the airfield on any day. As temp and pressure change you have to tell the altimeter this, or the height of the field would 'change' every day.
Guess what I'm saying not very well is that it works in normal conditions that you input, and above the transition laevel works on ISA.
SK