Mark Langford wrote: A very sharp electrical engineer I know, who's also an A&P and does pitot/transponder calibrations for local pilots, says it can damage the transponder transmitter or receiver (I forget which) if it gets significant enough due to reflected power impulses.
It is the transmitter. When the matching impedance is changed and no longer matches the output impedance then some of that power is reflected back to the output stage of the transmitter and thereby causes damage. John Milland