All this talk about computing pressure altitude from GPS reading is
irrelevant to the task of determining flight level or altitude (defined as
height above MSL).

It seems pretty relevant if I can save money and weight and
not have to calibrate an altimeter/transponder encoder. If I can get a
certified GPS with a transponder that is able to simulate exactly what an
altimeter would display, I have no need for the weight or
expense or certification for the altimeter, I wouldn't ever
need to update a Kohlsman window, I wouldn't have the power
consumption of a traditional transponder, yet I could calculate
final glides very well and have excellent and accurate information
about height above terrain even in places where the weather
forecasters had no pressure information.

The pressure altimeter is a fine device, but it's only advantage
(since June 10) in the United States over GPS is that it requires no
electricity. I have no doubt that if WAAS capable GPS had
preceded the invention of the pressure sensitive altimeter,
that WAAS GPS would be the altitude standard in the US for
ATC. WAAS GPS is cheaper, insensitive to temperature and
pressure gradients, passive (no reseting Kohlsman windows),
gives accurate altitude with respect to the ground, and
uses less power than a traditional transponder (since the air
doesn't need to be heated to 55 degrees C).

I think the only thing missing to make this system work
with the old standard is a pressure data signal,
perhaps added to the current GPS signals. This would allow
the GPS to simulate the altimeter, yet also provide final
glide and terrain separation information.

Does the current system do a great job of separating traffic?
As pointed out it is fine. Does it do a great job of
avoiding terrain? Ask the families of those killed when
airliners crash because the Kohlsman windows were set incorrectly.

UPSAT is banking on 250 ft 3/4 mile vis precision WAAS GPS
approaches being published over the next two years. It isn't
such a stretch to imagine U.S. ATC using GPS altitude for
IFR traffic separation at some point. The altimeter and encoder
may go the way of the 90 and 720 channel radio in the next
10 years...