(Leaving soon, will post math later if anyone is interested in the details.)
Short version: Suppose for simplicity of argument that all the probability of failure is in the portion of the machine that checks whether the received answer is correct, and that it has equal chance of producing a false positive or negative. (Neither of these assumptions is required, but I found it made the math easier to think about when I did it.) Call this error rate e.
Consider the set of possible answers received. For an n-bit answer, this set has size 2^n. Take a probability distribution over this set for the messages received, treat the operation of the machine as a Markov process and find the transition matrix, then set the output probability vector equal to the input, and you get that the probability vector is the eigenvector of the transition matrix (with the added constraint that it be a valid distribution).
You'll find that the maximum value of e for which the probability distribution concentrates some (fixed) minimum probability at the correct answer goes down exponentially with n.
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Yep, I'd guess that matters a great deal. (IIRC certain radical feminists dislike male-to-female transsexuals for that reason.)
That's the explanation I'd lean towards myself.
As for the radical-feminists-versus-transsexuals thing - there seems to be a fair amount of tension between the gender/sexuality theories of different parts of the queer and feminist movements, which are generally glossed over in favor of cooperation due to common goals. Which, actually, is somewhat heartening.