A PA24 COM PLT TAKES OFF WITH TAXIING TFC XING RWY 16L AT SEA; WA.

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FOLLOWING TKOF OF THE ACFT IN FRONT OF ME; I WAS GIVEN THE FOLLOWING INSTRUCTIONS FOR TKOF RWY 16L SEA: 'TAXI INTO POS AND HOLD; PLT'S DISCRETION; ACFT WILL BE XING THE RWY.' I THOUGHT THAT MEANT TAXI ONTO THE RWY AND IDENT THE XING ACFT AND THAT AS A VFR DEP; XPONDER CODE 1200 WAS RESPONSIBLE TO CLR THE ACFT DURING THE VFR DEP. I IDENTED THE XING ACFT AT TXWY N; ABOUT 8000 FT S OF MY TKOF LOCATION. AFTER ABOUT A 40 SECOND HOLD AND IDENTING 5 XING ACFT; I TOOK OFF AND MAINTAINED RWY HDG. I HAD ATTAINED APPROX 1500 FT PRIOR TO XING THE ACFT OVERHEAD. THE TWR OPERATOR WAS QUITE UPSET AND TOLD ME I HAD BEEN GIVEN AND HAD READ BACK CORRECTLY THE 'POS AND HOLD' INSTRUCTION. I HAD HEARD AND COMPLIED WITH THE 'HOLD' PORTION OF 'POS AND HOLD' INSTRUCTION AND DID INDEED HOLD. THE PART OF COM I MISUNDERSTOOD WAS 'PLTS DISCRETION' FURTHERMORE; I THOUGHT WHAT I WAS RESPONSIBLE TO OBSERVE AND CLR WAS THE XING ACFT AT TXWY N. FOLLOWING ABOUT A 45 SECOND HOLD TO LOCATE AND IDENT MY TFC; I DEPARTED BELIEVING I HAD CLRED MY TFC APPROPRIATELY. IN THE PAST; INSTRUCTIONS TO ME FOR CONCERNS OF WAKE TURB WERE ISSUED AS 'CAUTION WAKE TURB; TAXI INTO POS AND HOLD;' NOT 'TAXI INTO POS AND HOLD; PLTS DISCRETION.' IF THERE WAS TO BE A DELAY; I WAS ACCUSTOMED TO 'STAND BY FOR DEP CLRNC;' AGAIN NO MENTION OF THE POSSIBLY MISLEADING 'PLTS DISCRETION' AFTER 'TAXI INTO POS AND HOLD' INSTRUCTIONS. THIS DISCUSSION AND DIFFICULTY WITH THE TWR ALSO DIVIDED MY ATTN AWAY FROM MY LEVEL OFF AT THE 2500 FT ALT LIMIT AND I FINALLY LEVELED AT 3000 FT AND WAS ASKED BY THE TWR TO STAY AT THAT ALT BUT WAS GIVEN A TWR PHONE NUMBER TO COPY AND CONTACT AT MY DEST.