A LANCAIR 4 PLT AT 6500 FT RPTS AN NMAC WITH A B737 AFTER THE ACR ACFT DEPARTED SNA AND DID NOT LEVEL AT ITS ASSIGNED 5000 FT.

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VFR TRANSITUATIONION THROUGH LAX CLASS B AIRSPACE; S TO N; VFR; ACCORDING TO APCH CTL CLRNC. CRUISE CLBING THROUGH APPROX 6500 FT; 8500 FT ASSIGNED. B737 DEPARTED ORANGE COUNTY TO THE W AND BEGAN L CLBING TURN. THE B737 WAS APPROX 1 MI AHEAD AND BELOW (MORE THAN 1 MI DOWN) AND OFF OUR L-HAND SIDE. THE BOEING WAS KEPT IN SIGHT AND OBSERVED 100% OF THE TIME; NO CLOUDS. THE BOEING CONTINUED ITS CLB AND CONTINUED ITS L TURN. ONCE A NOSE ON ASPECT WAS REALIZED; WITH A RELATIVELY HIGH RATE OF CLOSURE; I BEGAN A NOSE DOWN PITCH AS AN AVOIDANCE MANEUVER; COPLT AND I COMMENTED TO EACH OTHER THROUGHOUT THE EVOLUTION. BOEING ROLLED WINGS LEVEL ABOUT 1000 FT OUT AND PASSED TO OUR REAR AT APPROX 500 FT/SAME ALT. APCH CTLR THEN QUERIED THE BOEING AS TO WHAT ALT IT WAS AT. THE BOEING REPLIED 6500 FT (OR THEREABOUT). APCH CTL STATED THAT THE ASSIGNED ALT WAS 5000 FT. BOEING REPLIED SOMETHING LIKE; 'WELL; I GUESS SO....' APCH CTLR THEN QUERIED ME AS TO WHAT ALT I WAS AT. I REPLIED 6.5 AND CLBING. APCH CTLR THEN ASSERTED THAT I WAS BREAKING UP AND UNREADABLE. ALL CLR A COUPLE OF XMISSIONS LATER (SAME RADIO). BOEING CREW ASKED CTLR FOR A TIME HACK AFTER THE EVENT. CONTINUED TRANSITUATIONION UNEVENTFULLY.