Our website is hosted in the States, but has a .co.uk domain name and is related to the UK public.
Google has no problem with this :)
However on Ask.co.uk we come pretty high in "General/Global" search, but if you choose "Show UK websites only" we are nowhere to be seen.
This leads me to believe that Teoma is not basing its results on domain extension or specific text content related to the UK, but instead going by where the site is hosted.
Now I am sure we all appreciate that Ask.co.uk visitors are only 1 step above Aol users, and these intelligent people are very prone to searching for UK specific sites, so in other words we are losing out.