"Jose" wrote

But in general, an
incorrect transponder readout could cause pilots to look in the wrong
place for traffic they would have otherwise seen right away, increasing
the risk of a collision.

Come on, how far off could it be, to cause you to look in the wrong place
would be a gross exaggeration, no?

The fix on the lat. - lon. will not be off at all, since that is generated
from a radar return. The altitude might be 50 or even 100 feet off, but
still, that would not be enough to cause a person to miss finding the
aircraft by more than a couple seconds.

Me? Of course, this is all a hypothetical situation, but if my transponder
is off by only 100 feet, it will be on, whether wrong by law, or not. Get
in the air and ask for a check from the tower, as to what you are being
reported at. Make a decision, then.
--
Jim in NC