B737-300 CREW REDUCED CLB RATE TO AVOID A DSNDING ACR ACFT ABOVE.

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POTENTIAL MIDAIR COLLISION. FLT PUSHED THE GATE IN AUS AT XA23 (LATE). WE WERE IN CONTACT WITH ZHU. AFTER CHKING IN WITH THEM; WE WERE CLRED FIRST TO 15000 FT AND IN A LATER CALL TO OUR CRUISE ALT OF FL220. WE WERE ON AN ASSIGNED HDG TO INTERCEPT THE CENTEX 040 DEG RADIAL AND PROCEED VIA THE FLT FPR. ALL OPS WERE NORMAL UNTIL PASSING 17000 FT. AT THAT TIME WE WRE ALERTED VIA THE TCASII PRIMARY TFC AUDIO ALERT TO SOME TFC AT OUR 11 O'CLOCK POS. THE ACFT (I BELIEVE HIS CALL SIGN WAS ACR XYA) WAS DSNDING THROUGH FL250 AND APPEARED TO BE HEADING TOWARD US. SINCE WE WERE CLRED TO FL220; WE WERE BOTH SURPRISED TO SEE AN ACFT SO CLOSE TO OUR POS DSNDING BTWN FL220 AND OUR PRESENT ALT. I ASKED THE FO TO SHALLOW HIS CLB RATE. WE KEPT THE ACFT IN SIGHT AND DID NOT FEEL A TURN WAS REQUIRED. THERE WERE NO TCASII RESOLUTION COMMANDS. THE ACFT APPEARED TO PASS OVER US WITH A LATERAL CLRNC OF LESS THAN 500 FT AND A VERT CLRNC OF BTWN 1000-2000 FT (BEST GUESS: US = FL180; HIM = FL195). I WAS ABOUT TO ASK WHY THIS ACFT WAS BELOW FL220 AND SO CLOSE TO US WHEN THE ZHU CTLR BEGAN TO QUERY THE ACR ABOUT HIS ALT. AT THIS TIME WE COULD STILL SEE (USING THE TFC DISPLAY) THAT THE ACR WAS BEHIND US ABOUT 5 MI AND LEVEL AT FL180. THIS IS MY BEST RECOLLECTION OF THE RADIO EXCHANGE: HOU -- 'ACR XYZ; SAY YOUR ALT.' ACR XYZ -- 'FL180.' HOU -- 'WHO GAVE YOU THAT?' ACR XYA -- 'THE LAST GUY.' HOU -- 'STAND BY.' AFTER ABOUT 10 SECONDS; HOU -- 'ACR XYA; YOU WERE GIVEN A HDG OF 180 DEGS; NOT A DSCNT.' ACR XYA -- 'OH.' SHORTLY THEREAFTER; WE WERE GIVEN A FREQ CHANGE. ON MY REPLY; I TOLD THE CTLR I WAS ABOUT TO QUERY HIM ABOUT THE ACR BUT HAD HEARD THE EXCHANGE. I ASKED HIM 'IS THERE GOING TO BE ANY PAPER ON THIS?' HIS RESPONSE WAS 'NO; THERE WAS LEGAL SEPARATION.' THE REMAINDER OF THE FLT WAS WITHOUT INCIDENT. MY CONCERN ABOUT THE INCIDENT IS HIS DEFINITION OF 'LEGAL SEPARATION.' WITH ACR XYA DSNDING THROUGH OUR CLRED FLT ALT WHILE ON A CONFLICTING FLT PATH; WITHOUT TCASII THERE WOULD HAVE BEEN AT LEAST AN NMAC AND POTENTIAL A MIDAIR COLLISION.