FLC OF MLG DSNDED AND TURNED OFF OF ASSIGNED ALT IN RESPONSE TO A TCASII RA.

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CLRED TO 12000 FT BY ZAU AND ADVISED OF VFR TFC LOWER IN THE VICINITY OF VEENA INTXN; HANDED OFF TO MKE APCH. HE CLRED US TO '11 (ELEVEN) THOUSAND' AND I ACKNOWLEDGED 11000 FT. TCASII SHOWED TFC: 12 O'CLOCK; 6 MI AT 11000 FT. TCASII ALERTED AT 3 NM; AT 2 NM TCASII RA TO DSND. DSNDED 200 FT WHILE VISUALLY ACQUIRING A SINGLE ENG CESSNA AND THE CAPT TURNED R TO INCREASE SEPARATION. I ADVISED A VERY BUSY APCH CTLR WE WERE RESPONDING TO A TCASII RA. HE THEN CLRED US TO TURN FURTHER R TO 040 DEGS AND DSND TO 10000 FT. WE CALLED MKE APCH AFTER LNDG AND TALKED TO THE SUPVR. HE INFORMED US THE ACFT WE HAD THE CONFLICT WITH WAS DROPPING PARACHUTIST AND WAS VFR IN A BLOCK ALT. HE WAS ALSO SURPRISED THE APCH CTLR HAD GIVEN US 11000 FT AS THIS WAS IN THE DROP ACFT'S BLOCK. ADDITIONALLY; ZAU WAS SUPPOSED TO GIVE US A HDG OF 040 DEGS TO AVOID THE DROP AREA PRIOR TO HANDING US OFF TO APCH. TCASII WORKED AS ADVERTISED. SINCE WE WERE EXACTLY AT THE CESSNA'S 6 O'CLOCK POS AND LEVEL; WITHOUT TCASII WE WOULDN'T HAVE SEEN HIM UNTIL DANGEROUSLY CLOSE. I'LL GIVE THE SYS A PROBABLE SAVE.