I've had a lazy day and put my mind to this, It is much as I said. The toolpath display does not follow the offsets, but displays what it sees taking place in the program co-ordinates.
I wrote a lttle program which is a 4"square (put in to define the limits of the display), then in each quarter of the square is a 1 inch circle, the starting position is determined by g54 (0,0) g55(2,0)g56(0,2) and g57(2,2).
I gradually added bits in to try and make it give a full display, but without success.
It draws the square (g53 co-ords), it draws the first circle(g54 - 0,0) (essentially no offset) - but, then, for the other offsets, instead of moving to a new start point - IT MOVES THE START POINT - then comes back to the first 0,0 position and carries on from there, drawing a circle on top of the first one. It does exactly the same with the other start points.
I even put a g53 move in before the offset to see if that would do anything - but NO,

I have had it show all four circles on the schematic before it is run ( and then sometimes it only shows 3) - all it does then, when it starts running, is follow the program co-ordinates.
The only thing I haven't done with it is actually try it on the mill - becasue I am set up in lathe mode at the moment. If anyone would like to try it it is posted below.