2) Why would you switch a transponder off, in the first place? Because every bit of electric equipment in an airplane is designed to be controllable, with a switch or a circuit breaker, so a flight crew can shed load selectively during an electric failure, or isolate the rest of the system if one piece of equipment acts up. Worldwide, we've had two episodes out of the millions of flights through the past dozen-plus years in which turned-off transponders arguably created a problem. Electric problems that potentially threaten flight safety are vastly more common.
3) Would an always-on transponder make a big safety difference? NO, it wouldn't. To understand why, let's take a minute to review how transponders are used.
Before you take off on an instrument flight plan, or at other moments in flight, as a pilot you get this instruction from an air-traffic controller (ATC): "Airplane 1234, Squawk 3547." When you hear that, you enter 3547 in place of the 1200 shown at the top of this page. And from that point on in your flight (until you land, "cancel IFR" or "cancel Flight Following," or are given a different code), ATC uses the "Mode C" reports from transponder 3547 to calculate airspeed, altitude, position, etc, and match that with information for the airplane assigned that code.
Suppose you were a hijacker, or a pilot bent on sabotage. If all transponders were replaced with new models, you might not be able to turn them off. But nothing could keep you from entering a code different from the one you're assigned. You could enter 3457 instead of 3547. Or another special code indicating that a plane has been hijacked. Or 1200, meaning a generic visual-flight-rules plan. Or any number at all. Or change them as frequently as you liked.
So if you wanted to thwart detection, the absence of an "off" switch would barely slow you down. Unless, of course, all civilian planes were re-designed to be controlled, like drones, from ground installations, which would create security and safety issues at least as bad.
All this is why, on my own list of safety and security improvements for air travel, removing "off" switches for transponders would not be in the top 10 and probably not in the top 25. Money and effort spent here would have bigger payoffs elsewhere.
What we're really looking for here is improvements in and faster adoption of a technology known as ADS-B. This is essentially a way for each airplane, with a unique identifier, to broadcast information constantly to ATC and to other planes about its location, direction, altitude, and other traits. I'm in favor of that -- for safety, efficiency, and security reasons (as I explained in Free Flight). I'll join Gregg in a pro-ADS-B rather than an anti-Off Switch campaign.
Meanwhile, check out Gregg Easterbrook's The King of Sports, which I gave my sons for Christmas.