CRJ900 flight crew sets incorrect local altimeter descending through FL180 (30.31 vise 29.31). This goes unnoticed until 9000 FT where a TCAS alert makes the crew ask questions.

Narrative

When at FL190 and about 20 minutes from arrival in Cleveland and approximately 50 miles south of KEATN Intersection; we were issued a descent to 15;000 FT. I sincerely believe I heard the Controller give us an altimeter setting of 30.40 at that time. I set 30.40 in the altimeter and began the descent. The First Officer was off frequency listening to the ATIS (which he reported scratchy and hard to hear) as well as contacting Operations in Cleveland and standard in range passenger briefing. The weather was IMC with rain; icing; moderate chop. Ultimately; he came back on and we set 30.40 across the board. Later 30.31 as he had written only .31 on our ATIS data card. (The correct altimeter setting was 29.31.) We were given a further descent to 13;000 FT then further to cross KEATN at 10;000 FT. Each time we reported leaving an altitude (which would have been off by 1;000 FT) but not 1 of 3 different Controllers caught the error. As a result; we descended to 9;000 FT thinking we were at 10;000 FT. Still not a single controller noticed our altitude. I was the first person to draw attention to it when our TCAS showed an aircraft at our altitude and opposite direction at our 12 o'clock position. I queried ATC and the Controller appeared a little confused at first. The opposite direction Dash 8 responded to a TCAS RA and descended. We received only a brief TA. Again; it was I who asked for an altimeter setting and we subsequently corrected our altitude to 10;000 FT.