as far as i can tell, the "10:10 code" is just a linear rescaling of the longitude and lattitude then encoding in base 32 (with a checksum for the last four bits).
if the above is correct, why not explain it thus?
if you do this, it becomes obvious what happens to errors; we know you can gracefully degrade the accuracy (since it's a linear encoding) by dropping the bits before the checksum.
what are the coding properties of the checksum? it doesn't look like crc32 or adler. what is it? why did you choose it?