FYI, this may help filter out some of those inaccurate results:

http://adwords.blogspot.com/2011/03/location-targeting-on-adwords-now-with.html

Although the hiding of those headers is a little odd, I doubt you'd get hit for it as the hidden h2's are all consistent with the displayed content - it doesn't look (to me, at least) like anything's being done in a spammy manner.  H2's are a very weak ranking factor to begin with, and It's not like you're keyword stuffing or trying to rank for irrellevant keywords.  Of course, if you can find someone who can tweak things and treat those elements appropriately, all the better.

Off topic, but you may also suggest to your friend that they optimize their images.  Those image files on the first page you mentioned are very large for the sizes at which they are being displayed and needlessly add to the page load times.

FYI, this may help filter out some of those inaccurate results:

http://adwords.blogspot.com/2011/03/location-targeting-on-adwords-now-with.html