> I would figure it out pretty quickly it this was not genuine, except if the geo-block protection would be fooled too.

It would (unless the blockers use this company's database I guess):

> The IP registry data also says “Country X” — because the provider self-declared it that way.

That could be good or bad depending on what you're using the VPN for. E.g. if you only care about evading stupid local laws like the UK's recent Think of the Children Act, then it's actually great because you can convince websites you're in Mauritius while actually getting London data centre speeds.

But if you want to legally be sending your traffic from another country then it's less great because you actually aren't. To be honest I can't really think of many situations where this would really make a difference since the exit point of your network traffic doesn't really matter legally. E.g. if a Chinese person insults their dear leader from a VPN exit node in the UK, the Chinese authorities are going to sentence them to just as much slavery as if they did it from a local exit point.

If the government is using the same fake data as the rest of the Internet you want to be using that fake data too. You want to be precise, not accurate. If the FBI records your endpoint as Iran and you say "I wasn't actually sending traffic from Iran, where there are sanctions, I was sending from London but my VPN provider lied on their WHOIS record", you will be in just as much trouble as if you were actually sending data from Iran.