Well, it's not supposed to be a real shadow. Remember, there are NO shadows in that picture, only a couple of negative lights. The effect is best combined with actual stencil shadows or something like that. Used properly, I think it's one of the best tactics to use to simulate radiosity shadows without a big performance hit (keeping in mind that it uses the opposite approach to drawing fake radiosity).
And actually it does work pretty good in almost any lighting situation. Even with minimal environment light, it still creates a nice effect as long as you lower the intensity of the negative light. Anyway, here's a pic showing what happens when you use the negative light idea with stencil shadows (both pictures are using basic point-lighting):