Tap "beacons" and hit "turn this device into an iBeacon".
Works for any BLE-enabled iDevice which is iPhone4S+
No, Apple dropped BLE support from the simulator with iOS 7. It was really quite flaky and quite cumbersome to set up, so mostly I just used the device any ways.
Yes, you need a device to test this out. You can emualte a beacon with your Mac (there's a link to the app on the blog post) and that's about it.