I am not sure if the data is incorrect or if this is how it is supposed to work.

For a Read-Only user that is only able to read contents of files in the Released state.

When the file is Released the user sees the following on the Version Tab

Local version: 12

Latest version: 12

Local revision: C

Local state: Released

When another user puts the document in the Work in Process state on a different PC the Read only user sees

Local version: 12

Latest version: 13

Local revision: C

Local state: Work In Process

When another user puts the document in the Pending Approval state on a different PC the Read only user sees

Local version: 12

Latest version: 14

Local revision: C

Local state: Work In Process

Why does the local state change to Work In Process?  I would expect the local state to remain as Released.  Also as the document goes thru other transitions (Pending Review or Pending Approval) the local state does not change it is always Work In Process.