That does not appear to be how it works.
First, I am reported as being at random locations whenever in my house and getting the signal from the extender. Those locations are frequently 400+ miles away. There is absolutely no way that the extender is picking up a signal from a cell tower 400 miles away and amplifying it. Cell tower's don't even have remotely close to that kind of range.
Second, the "verizon location services" ignore the GPS signal in the phone. I can have a perfectly clear GPS signal (which I can verify and test by using the phones navigation software), and the "location services" will still report me as being in a location that is 400 miles away from the location that the GPS is reporting. In that respect, the verizion location service itself is obviously brain-dead-dumb in its basic design. It ignores the GPS information provided by the phone.
What seems to be the case is that the network extender is provided some location information from "somewhere", probably a look up table in some database where verizon stores what it believes to be the locations of the extenders. And that "somewhere" is just giving wrong information.
The problem is not inside the network extender, I never believed it was. but it absolutely is a problem with the way verizon has implemented the infrastucture around the network extender. And I maintain that they should fix it. Or advertise that verizon location services don't function properly when you use a network extender when they sell the things.
