That's how it is in the U.S. (at least in California). When you sell a car you have to write down the odometer reading on the paperwork and indicate whether or not it is accurate to the best of your knowledge. But actually changing the reading is not illegal. It makes sense: the reading could be off due to mechanical failure.

Makes sense.

I drive a Jeep, and the speedometer on it is off by 12% due to the larger-than-stock tires that are on it. The odometer reads 160k, but I would assume that it was 170-180k on it in reality, depending on when the tires were originally installed.

Unless you've simply decided this isn't important to you, changing the speedometer gear on a Jeep to an appropriate size for your tires is generally a several minute job with minimal tools.

On the other hand, what one really should be caring about is not the mileage per se, but how many cycles are on the drive train. The distance the chassis has moved doesn't really matter.

But each cycle represents more wear with the larger tires, since the drivetrain torque is higher. You can't cheat physics.

It's probably not a linear relationship though.

Correct—but having a functioning speedometer is generally useful.

Also, older vehicles have shorter odometers that roll over back to zero automatically.

I believe my insurance company took the odometer reading into account when calculating the rate for next year, so I wouldn't even have to sell the car to turn clocking into fraud.