Since then, we have been waiting to see any real feedback on how exactly it works. We learned from a Googler's post that Setting the Geographic Target in Google May Not Limit You to that Target Area but does it actually help you in geographic areas.
One person at WebmasterWorld reported that he set up his geographic target for his site two weeks ago and nothing came of it as of yet.
Now, 2 weeks later, when I search for a specific string from the Spanish subdomain in google.es with the "sites from Spain" option selected it still doesn't show up. If I select the "sites in Spanish" option it does, with a cache date later than the date on which I made the change in W.Tools.
So as of now, we still do not know if it works because we still do not know how long it takes to go into affect. Some feel it may take a few months to make an impact. Time will tell.
Forum discussion at WebmasterWorld.