In slideshow mode, Keynote detects the presence of the VGA adapter, and places a small console in the middle of the iPad screen (see screenshot below). The console shows the current slide number (out of a total number), and each tap of the right arrow either moves to the next slide or reveals a new bullet. All of the transition and bullet effects that had been in my original Keynote presentation played flawlessly. There's a small icon that can be tapped to show a small "filmstrip" of your slides on the left side of the screen as well.
One feature that I thought was really cool was the virtual laser pointer. By tapping and holding on the console, a red dot appeared on the screen and could be moved around simply by dragging my finger around the console.
Now the bad point -- I could not use the iPad to project Safari on the screen. There was an instructor's PC running Windows XP that was also connected to the projector, so it was very easy for me to switch between iPad and PC. Of course, I had to rub my hands vigorously with antibacterial lotion after touching the PC, but it was adequate for the task of showing my students how to use blogging tools.
That's the one negative I see about the VGA Adapter -- it only works in apps that have been properly equipped through an API to drive the adapter. Video apps work, so you can display movies and TV shows, but you can't just show the iPad's home screen and icons, for example.
Before I do the next class, I'm planning on capturing a lot of the demonstrations that I do in video, so that I can show them on the iPad and not have to rely on that PC. As it was, I found the iPad to be an excellent speaker's console since I could have it flat on a table and simply tap the screen to move ahead in my talk. It opened my Keynote deck instantly, and during the entire 3 hour class, I think I only used about 25 percent of the battery charge (the iPad wasn't connected to a power source).
For the most part, using the iPad to give presentations is pure win. You just need to prepare for those apps that can't currently drive the VGA adapter.