The signal strength meter for FM is about 20-30 dB lower than the expected field strength according to Radio-Locator's maps.
Yes, I ran some bench tests a few weeks ago and confirmed this. The difference is mainly due to your height above ground level; FCC predictions are based on a 9 meter (~30 ft) height, at which level the field strength is usually at least 15 dB greater than at one or two meters above the ground. Also, as you realize, the telescoping whip antenna is less efficient than a 1/2 wave dipole, so that probably accounts for another 8 to 10 dB. At FM frequencies, even a true balanced dipole would produce about 50% (6 dB) less voltage at its terminals than the actual field strength after converting from volts/meter to volts.
I did observe that the meter is quite linear in the FM band up to 70 dBu, then it goes into saturation.
For 25 bucks, you can learn a lot about VHF propagation with one of these -- for example, check the field strength in front of an office building, then walk inside and watch how quickly it drops. You'll then understand that a 6 dB increase in digital power might only gain one row of cubicles.