Conclusion
The current was corrected only from the power supply mains to the Power Saver only. Current from the Power Saver to the inductive load remains the same. In order to keep the current minimum along the cable, the power saver will be better kept as close as possible to the load that requires power factor correction.
The use of a power factor correcting device helps to reduce current from the power mains to the device. Lower current means that the current carrying AC cable can be afford to be thinner. To put it in another way, more inductive appliances can be connected to the same AC cable if they are all power factor corrected. Lower current flowing through the cable also means less power loss on the cable it self. High current flowing through a thin cable can generate some heat (cable loss). However cable loss is usually insignificant.
To conclude, the power saver can help to reduce current flow. In order to reduce the current, you will need to understand your load and apply the correct counter load value. Over correcting an appliances will make it worst. In terms of energy saving, the saving will be insignificant. In fact, the experiment shows a slight increase in wattage. It is quite conclusive that the Power Saver product is a scam.
The following are some other sites from people who have similar knowledge and explaination. I have collected these website for your further understanding of how power saver works.