Robert_Charlton - 10:08 am on Oct 14, 2013 (gmt 0)
Not sure how proxies interact with Google's geo-location... but I'm pretty sure it's hyper-local IP data that they use, and that can be overridden by using the default location setting under search tools.
I know that the Location setting has been tested fairly thoroughly by SEOs, and it's reliable for specifying placename. In my use of it, I've been able to walk my way down a freeway and pick up places along the way by proximity.
My guess is that it defaults to city centroid, though, rather than actually picking out a neighborhood within a city, which I've seen IP geo-location do.