Most of the configuration and example I've seen out there, the backend server are either on the same machine or the same network network. Has any body done this with backend servers located in different physical location, over WAN ? If you so what were your experience ?
You'll probably get bad performance since connections will always have to flow through your reverse proxy to the remote backend and back again. As coredump mentioned, you probably need to tune the proxy settings to avoid getting timeouts. Is it not possible to put the reverse proxy on the same network as your backend?
If you want to load balance across geographic locations there are better ways to do this such as services like 3crowd. The use of an upstream proxy will just slow things down, you should send your users directly to the resource rather than pass it back through Nginx.
I currently do this with three nginx nodes via round robin DNS to third party ad serving solution. We needed to get around a few limitations for edge case users and the proxy seemed the best bet. Since our ad calls are very small and the solution we are connecting to is very robust we haven't seen a huge slow down compared to a normal request. Coredump is correct though that there needs to be some tuning of the proxy settings to make sure requests do not hang excessively long though.