Andys: This is why you need a transponder to fly in controlled airspace, and up around the higher altitudes where more (and larger) aircraft roam. Even if you're only mode-c, they'd be able to see you and avoid you.
Of course I understand the cost involved, but thats the price you would have to pay to fly in controlled airspace. Though it occurs to me that perhaps a mode-c transponder (ie: without the mode-s 24bit unique code linked to your airframe) could be club-owned, and borrowed or rented on the odd occasion you want to fly through controlled airspace. That way the purchase and maintenance costs would be split among members of that club. Not sure if that's practical or legal, though. I don't think you can get portable ATC systems, and if you share a rack-mounted jobbie, then you still have to route the wires and such so you might as well have your own at that point. But it would ease that particular issue I think.
*edit*
Thinking about it more, I seriously doubt there's any such thing as a handheld atc. They put out quite a bit of power and they are almost constantly transmitting. Gives you a headache even when you're six or seven metres away from the antenna - I know this from experience.
However it may be possible to do a temporary install with a set length of cable and an atc box that has its own altitude sensor built in - so you'd only have to supply power and route the cable to the antenna, which I suppose could be duct-taped to the side of the fuselage or something like that. Dodgy, I know, but possibly doable. I don't know the ins and outs of modifying an RA aircraft. At work (group 20 commercial aircraft) you do nothing without an EO or SB or some kind of legal XXXX-covering stuff from the manufacturer or design department or something like that. As long as it was a secure temporary installation, it ought to be ok, I imagine. And if it was a self-contained atc box its calibration wouldn't be tied to any one aircraft.