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Here is where the proof lies, and where you can fool your friends. By clicking on the place tagged in the status, it opens up a page which shows how many people have previously checked into that place. (For example, Buckingham Palace's check-in page can be found here).
However, if you simply hover over the link you will see a map that will display in a hover-over window. If you click on this link, it will take the co-ordinates of where you checked in on the simulated device and display them in a new window on Bing Maps.
Please read the disclaimer! You can find this and more, including the explanation - as well as the pro's and con's of using spoofed geolocation on the ZDNet iGeneration blog.