Not sure if this is a feature or a bug, but the fix is easy enough if you're willing to edit the code of geolocation.php
I think the problem is that when 'public' and 'geolocation-on' are unset (as they are for new posts) the code that checks their values returns an empty string: but we're only setting posts to be non-public and off if the value is explicitly '0'.
In the code for the function admin_head(), look for the line:
if(public == '0')
and change it to
if((public == '0') || (public == ''))
Then make a similar change five lines down:
if((on == '0') || (on == ''))
(I guess changing the 'public' default is optional; I did, but you might not want to.) I agree, I hope a 'default off' becomes available on the settings page.