So your case needs: A power source, GPS (or other location capability), internet link.
Since you're outside the phone and thus limited to user space applications and Apple's restrictions on what kind of tasks can run in the background and devices that can be attached via the dock/lightning connector (without requiring a JB). Essentially, you're stuck providing your own data link since you can't easily leverage the phone's connection.
If the case's battery runs down, the GPS stops working and it can't tell where it is anymore, so the utility of this function is limited to the battery life of the case. The longer that is, the heavier it is.
The Garmin GPS tag I linked to earlier in the thread has all of these features, including its own cellular link including a $49/year service from AT&T. What exactly do you propose to do differently than it to cut the cost of the device by a factor of 5?
FWIW I've been involved in the hardware/firmware design of several "last gasp" and theft/tamper detection hardware features and they all suck.
B
Hopefully, the owner finds out it's lost before the battery on it dies, which shouldn't take long to figure out. Then, just like in Find My iPhone, you'd sign in and figure out where it is. Similar to that, but it's a case. That Garmin device you showed me can be taken off with ease as well...