There were a lot of rumors, tests, and speculation on this for a while, but in the end pretty much everyone either posted a correction or fell silent on the issue. The GPS on the iPhone can not be seen by the iPad when tethered.
The confusion was caused because with the iPhone tethered the iPad could download the database for local hotspots and triangulate it's rough position. Without the iPhone tethered, and no wi-fi connection of it's own the iPad can only find it's location if it previously downloaded the database for that area. When it was keeping this data forever (and causing a privacy scandal) the odds were good that it had this database if you'd ever been there before with a connection. Now the database is limited to how much it will store, and you are less likely to have it on hand from previous visits.
And of course, if there are no hotspots in the area, or the ones there are not in the database, you're out of luck even with the iPhone tethered.