A Google Groups thread leaves me to believe that it might not be the case. Susan Moskwa, an official Google representative said:
Using the tool to target example.com to the UK may have some effect on non-country-restricted searches, but it probably won't be the same as having example.co.uk. Most sites will see results somewhere between the two extremes (no effect, and total equivalence with ccTLDs).
Wait, so are you saying setting your geographic target may or may not have an impact on how your rank in a localized version of Google? Let me bold Susan's response, " Most sites will see results somewhere between the two extremes (no effect, and total equivalence with ccTLDs."
Hmm and I not understanding the response? I am not sure. I have seen dozens of posts complaining that the tool doesn't improve their ranking in the localized Google version. In fact, respected SEO, David Naylor just posted a blog post with the title, Google Webmaster Tools smoke n mirrors. In that post, he expresses his dissatisfaction with the tool and describes how it simply doesn't work for him.
Does it work for you? Please do comment with your feedback, if you have any.
Forum discussion at Google Groups.