Just to be clear, are you saying that if there's an emergency, that the police/ER can find her even if her GPS is not turned on, thanks to this "locator" thing?
Also, does it eat any battery power by leaving it on?
1) Yes, Location is determined using cell tower proximity data if GPS is not available or not enabled. You can disable location in Settings -> Location -> Location Setting (uncheck).
My guess would be that a 911 call would override this and send location data anyway, but I'm not certain and I know I wouldn't trust it being disabled just to try and save a little bit of battery.
2) I don't believe it uses battery power solely by being enabled per se, however apps that request location data may cause it to ping the cell tower more frequently. Stuff like Weather, etc.
GPS is a lot more fine-grained of location data when compared to cell tower proximity, but uses a much larger amount of battery when compared to it.
I just wish we could turn off the icon
, it just seems a tad pointless when the GPS has its own separate icon when its in use. AFAIK, the Droid doesn't show the icon for Location...it may be a 2.x thing. No idea.