The trick will only work if the sensor information on the target ship travels at lesser speed than the attacking ship. In the ideal case, the target ship has lost her faster-than-light sensors (as often happens in Trek battles), so her targeting information travels at lightspeed, and any speed above warp one will do the trick. If the enemy has sensors capable of warp six, though, a warp seven dash will do. And so forth.
Naturally, in "The Battle", the E-D had not lost any sensors and should have been able to track the Stargazer effortlessly and without "visual illusions". But the whole point seemed to be that Riker wanted Picard to keep on thinking that this was the Battle of Maxia - because if Picard stopped doing that, he'd become unpredictable, and Riker would have to kill his boss. Nobody else was in danger, as the E-D could always simply have destroyed her opponent, but saving Picard required keeping up the pretense. Which is why leaving the viewscreen on "lightspeed mode" would also be informative and help Riker adapt.
(Of course, what we saw would not be what things would look like to lightspeed sensors aka the naked eye. What would be seen is one Stargazer popping in out of nowhere, and then an image of her splitting from that and receding to the distance, butt first as light from all the spots she had previously traveled through would finally arrive to the eye, nearest light first...)
It's quite in keeping with Trek space battles that Picard would know immediately when the Ferengi lost their FTL sensors. Those things are active, after all, like radar beams - so when the "radar beams" stopped hitting Picard's ship, he'd know the enemy was forced to rely on lightspeed or STL targeting. And since Picard still couldn't flee (engines down etc.), this would be his opening for an attack. And any attack would do, but a high speed dash to point blank range would minimize risk of return fire, maximize phaser power (those supposedly hurt more at close range) and hopefully also confuse the enemy a bit (although that hardly mattered, because no helmsman in Trek reacts to enemy action in a split second anyway).
Timo Saloniemi