Actually, the Flash BBC iPlayer will _not_ work if it connects from the United States. Additionally, I discovered that the BBC is using Akamai for streaming their live content, and Akamai's United States servers do not have the content. So even if you convince the BBC that you're in England, but talk to Akamai servers in the US, the content does not stream.

Interestingly, BBC is using Limelight for pre-recorded content, and that content is apparently cached globally.

I never tried the live streams - the time difference was inconvenient enough.

Live content gets licensed differently to the catch-up content, which you can view without paying the license fee. Given catch-up is usually more restricted (some programmes unavailable for example) I imagine the only reason Limelight is globally accessible is because that's the default mode of operation and the iPlayer website is considered a sufficient region restriction mechanism.