ALTDEV AND TCASII ALERT WITH ERRONEOUS ALTIMETER SETTING.

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DSNDING FROM FL310 TO FL240 TO COMPLY WITH ATC RESTR 10 SW DJB AT FL240; CTLR ADVISED US THAT TFC EBOUND WOULD PASS UNDER US AT FL230. FO CLRED OFF RADIO TO SAY GOODBYE TO PAX. AT THAT POINT TCASII ISSUED A TA. THE TARGET WAS AT APPROX 10 MI; 10 O'CLOCK; AND 1200 FT BELOW US. THE TARGET THEN CHANGED FROM YELLOW TO RED. I IMMEDIATELY DISCONNECTED THE AUTOPLT (MY ALTIMETER SHOWED US ALMOST AT FL240); GLANCED AT THE BAROMETER SET KNOB AND SWITCHED IT FROM 'HECTAPASCALS' TO 'INCHES.' THE ALTIMETER READOUT AT THAT POINT JUMPED FROM FL240 TO FL238. I CONTINUED TO APPLY BACK STICK PRESSURE UNTIL THE VVI SATISFIED THE TCASII CLB COMMAND (ABOUT 1000 FPM). AS THE TARGET PASSED ABOUT A MI BEHIND US; TCASII ISSUED A 'CLR OF CONFLICT' MESSAGE. I THEN SMOOTHLY RETURNED THE ACFT FROM FL242 TO FL240. THE FLT CONTINUED TO DEST WITHOUT FURTHER INCIDENT. THE LOWEST READOUT BY TCASII ON THE TARGET THROUGHOUT WAS MINUS 800 FT. THE WHOLE INCIDENT WAS SET UP BY MY FAILURE TO RESELECT 'INCHES' ON MY PRIMARY ALTIMETER'S BAROMETER SET KNOB AFTER TRANSFERRING THE MILLIBAR READING TO THE STANDBY ALTIMETER. THIS IS A PROC DONE IN PREPARATION FOR THE READING OF THE DSCNT CHKLIST. I THINK THAT A SIMPLE SOLUTION TO PREVENT A FURTHER OCCURRENCE OF THIS INCIDENT WOULD BE TO REMOVE ALL STANDBY ALTIMETERS FLEETWIDE THAT HAVE A MILLIBAR BAROMETER WINDOW AND REPLACE THEM WITH ONES THAT ARE CALIBRATED IN INCHES. THAT WAY THE STANDBY ALTIMETER COULD BE SET FROM THE ATIS CARD AND NOT BY FIDDLING WITH THE PRIMARY ALTIMETER KNOB.