Maybe I should have made my handle "former operator"...
In my utility the transformer oil level gauge is typically mounted on what we call the "conservator," which is in truth a head tank that allows for the expansion and contraction of the transformer's oil with loading and ambient temperature changes.
You are intuiting correctly: conservators are typically sized to a specified minimum ratio of transformer tank volume such that neither will the conservator overflow when the oil reaches its hottest temperature nor the transformer tank inhale [for lack of a better term] air when the oil reaches its coldest temperature. The oil level gauge is so positioned and its float adjustment so calibrated that, when the transformer oil in both the transformer tank and conservator is at 25°C, the needle on the transformer oil gauge should point very closely if not precisely to the 25°C index mark on the gauge.
As part of a transformer inspection, operators / field staff routinely cross check the position of the pointer against the prevailing oil temperature as a means of determining whether the transformer in question contains the proper amount of oil.
CR
"As iron sharpens iron, so one person sharpens another." [Proverbs 27:17, NIV]