Update: Yes, I am crazy! Turn out that I forgot to do "command.Transaction = tx;" and then I went and read some outdated documentation, and got the completely wrong picture, yuck! I still think that requiring "command.Transaction = tx;" is bad API design and error prone (duh!).

Someone please tell me that I am not crazy. The output out this program is:

Wrote item
Wrote item
Wrote item
3
Wrote item
Wrote item
4
Wrote item
Wrote item
5
Wrote item
Wrote item
6
Wrote item

This is wrong on so many levels...

public class Program
{
	const string connectionString = "Data Source=test.dsf";

	public static void Main(string[] args)
	{
		File.Delete("test.dsf");
		var engine = new SqlCeEngine(connectionString);
		engine.CreateDatabase();

		using (var connection = new SqlCeConnection(connectionString))
		{
			connection.Open();
			SqlCeCommand command = connection.CreateCommand();
			command.CommandText = @"CREATE TABLE Test(Id INT IDENTITY PRIMARY KEY, Name NVARCHAR(25) NOT NULL)";
			command.ExecuteNonQuery();
		}

		ThreadPool.QueueUserWorkItem(ReadFromDb);

		using (var connection = new SqlCeConnection(connectionString))
		{
			connection.Open();
			using(IDbTransaction tx = connection.BeginTransaction(IsolationLevel.Serializable))
			{
				while(true)
				{
					using (SqlCeCommand command = connection.CreateCommand())
					{
						command.CommandText = @"INSERT INTO Test(Name) VALUES('A');";
						command.ExecuteNonQuery();
					}
					Console.WriteLine("Wrote item");
					Thread.Sleep(500);
				}
			}
		}
	}

	private static void ReadFromDb(object state)
	{
		Thread.Sleep(1000);
		using (var connection = new SqlCeConnection(connectionString))
		{
			connection.Open();
			using (IDbTransaction tx = connection.BeginTransaction(IsolationLevel.Serializable))
			{
				while (true)
				{
					using (SqlCeCommand command = connection.CreateCommand())
					{
						command.CommandText = @"SELECT COUNT(*) FROM Test;";
						Console.WriteLine(command.ExecuteScalar()); 
					}
					Console.WriteLine("Wrote item");
					Thread.Sleep(500);
				}
			}
		}
	}
}