[ffo]

You can choose in the OS to use a general location or stick to something in your proximity.

At least in the Developer Beta 2

[defaultname]

The two options are basically city-level or country but same TZ level. e.g. Toronto, or somewhere in Canada in Eastern time (which I mean would almost certainly be limited to Toronto -- presumably these options make more sense on say the East Coast for the US where there are a number of possible major locations that fit)

There are clearly some bugs. Occasionally I, in Canada, get routed through the US. This guy got routed through the US. Neither case should happen by Apple's description. Apple is quite intentionally trying to avoid their relays getting around geo-restrictions (likely to avoid them getting blacklisted).

[8note]

I'd assume apple can be required to relay any customer's traffic's into by the government.

[gomjabbar]

Only the ingress proxy is controlled by apple. The egress proxy is required to decrypt the URLs.