I can speak to the behavior of what I've seen so far, but I can't be sure of the technical details behind. Let me explain:
On a nice long drive with friends (our kids had a soccer game North of the Cincinnati area) I was in the passenger seat, tethering via MyWi to my jailbroken iPhone 4. I have Navigon on my iPhone but did not have it installed on my iPad, but pulled up Maps to check our route (it was my new toy, so the iPad was my first choice). I noticed that it was tracking us near flawlessly, so I just let it run out of curiosity. Well over an hour drive and only a couple of "spikes" where it momentarily lost us. Pretty darn good considering my iPhone was in my pocket as I sat in the passenger seat and not on the dash.
So, it's definitely getting SOMETHING from the iPhone 4 to figure out location but I'm not sure if it's data being passed from the GPS chip in the iPhone or if it was using tower assisted GPS data to track us. Either way it was extremely usable. Keep in mind that I was using this along a highway drive and not a city trip with lot's of quick turns, so I can't speak to that situation. I may install Navigon on the iPad to see if it even works with it in that configuration.
