Your overall thought process is well defined and presented, but the information you have used as your salient points is inaccurate at best, down right wrong at its worst.
Steve Jobs wanted Google Maps, from Android, on the iPhone since Android 2.1. In fact, it is documented that he asked for it several times. Google agreed to turn a version over to Apple for release with iOS as long as Apple allowed their tracking/metric data to be collected. Apple refused due to privacy concerns. IE Apple was looking out for its end users.
Now before you say "Apple doesn't care about our privacy", let me remind you that Google was fined over $20 million for finding a way to circumvent the iOS Safari browser that allowed tracking cookies to be installed. Apple brought this fact up to the Federal level and Google lost because they were directly tracking people that requested not be tracked. So Apple has shown they protect their users. And that is why we don't have Google Maps at this time. As a side note, Apple will allow Google to create a Map application for iOS as long as it meets all the guidelines laid out in the Developer SDK.
Google maps, web based version used thru Safari, will without a shadow of a doubt show your GPS location. You simply have to give it permission to use the GPS feature of iOS. Again, this was done for privacy protection. BTW, Android has the same exact privacy protection that iOS does when it comes to using the GPS sensor.
There are mulitple GPS based applications you can download for free on iOS if you dislike the results of the standard Maps app. Apple even has them highlighted in the Featured program section of the app store should you need help finding them.
BTW, Android's Google Map still gets it wrong to this day, just like iOS 6 Maps. I have a Droid X that I use strictly for navigation, with my iPhone setup as a hotspot, and I still am submitting errors for the DFW metroplex.