It does post it at the location when you tape the Report button. (It says location and time saved on the screen when you tap the report button.)
You can then save the report later. You are correct that this could get you caught for touching your phone while driving. It may be worthwhile for them to consider building in a static time or distance delay, allowing drivers to post the report after passing, but only for police I think.
With the advent now of voice-activated traffic jam reporting in the current iPhone beta, it is only a matter of time until this is expanded to other report types. And then we can report hands-free!