In the scenario you described, BTS A will measure the signal received from BTS B on each of its timeslots and report it as noise to the BSC.
The basic idea behind the idle channel measurements is this: The BTS measures the received signal level on ALL idle TIMESLOTs and reports these values to the BSC as the noise levels on the timesots. These measurements are done only on the UL. The measurements enable the BSC to judge the level of interference on each timeslot, so that during channel allocation, it can assign the channel with the least interference (if your channel allocation algorithm uses quality as the criterion). I’m an ericsson person, and what I’ve said relates to ericsson.