I guess the question is what the obfuscation is exactly for. Offset of 50-100m won’t work in most rural areas for most reasons I can think of, possibly for “The Shake is in an unlocked shed and I don’t want just anybody to go pick it up”. Of course, there will be places where the closest other residence is kilometers away.
Given that you CAN set the exact location of the device, I think you should be able to set the exact “fake” location yourself if desired. That will eliminate any incentive for people to give a false real location as a lark or just because the real location will give away something they’d rather not reveal.
For most people an algorithm that shows the device at nearest (or >1km) “point of interest” (Google Maps or several databases online?) would be enough for the “Oh gawd, I don’t want burglars to know when I’m stomping around at home or crazed forum trolls/fans hunt me down” effect.