A B727 FLC LEAVES THEIR ASSIGNED ALT WHEN GIVEN A NON STANDARD PRESENTATION OF THE ALTIMETER SETTING OVER BWZ; NJ.

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DSNDING VIA RADAR VECTORS A CLRNC WAS ISSUED. I WAS THE PF AND THERE WAS A HIGH COCKPIT WORKLOAD. I UNDERSTOOD THE CLRNC AS 'L TO 090 DEGS AND 3000.' I QUERIED THE CAPT 'WAS THAT 3000?' WHILE SETTING 3000 FT IN THE ALT ALERT WINDOW. THE CAPT POINTED AT THE ALT ALERTER AND SAID 'THREE THOUSAND' AS PER OUR PROCS. PASSING THROUGH 7000 FT THE CAPT SAID 'IT'S NOT CAPTURING.' (OUR PREVIOUSLY ASSIGNED ALT HAD BEEN 7000 FT.) I RESPONDED BY STATING 'I THOUGHT WE HAD BEEN ASSIGNED 3000 FT.' THE CAPT QUERIED THE CTLR WHO CONFIRMED 7000 FT WAS THE ASSIGNED ALT. THE ACFT ALT DSNDED TO 6700 FT ONLY. IN DISCUSSING THE EVENTS LATER WE DISCOVERED WHERE THE MISCOM OCCURRED. THE CTLR HAD STATED THE ALTIMETER SETTING AS 'THREE THOUSAND' INSTEAD OF '3-0-0-0' AND THE CAPT HAD READ IT BACK JUST AS THE CTLR HAD GIVEN IT. THEN; THE CAPT POINTED AT THE ALT ALERTING REFING THE ALTIMETER SETTING BECAUSE HE MISTAKENLY THOUGHT I WAS ASKING HIM TO VERIFY THE ALTIMETER SETTING. LESSON LEARNED; ALWAYS READ ALTIMETER SETTINGS CORRECTLY EVEN IF GIVEN INCORRECTLY BY CTLRS TO AVOID COCKPIT CONFUSION. SUPPLEMENTAL INFO FROM ACN 489107: I READ BACK THE CLRNC AS 'L TO 090 DEGS AND 3 THOUSAND.' MY COPLT HEARD 3000 AND DIALED IT INTO THE ALT REMINDER; UNBEKNOWNST TO ME AT THE TIME.