Location, location, location
This is really not a new issue: international airlines, ships etc have had this for centuries and have a nice simple solution: you register your aicraft/ship/company in a country and are subject to those laws. Fly from Heathrow to Chicago on an American Airlines plane, it's under US law because it's a US aircraft: you'll need to be 21 to get alcohol on board, not 18. Same route with BA, it's 18 because it's a UK plane. The really bad countries get blacklisted, so aircraft registered there can't operate here (parts of Africa with really dodgy safety inspection records, for example).
Apply the same here: The Reg is a UK website and company, so it should be subject to UK law, even if I happen to be viewing it while on holiday in Chile or China. Hotmail would be US registered, so if the UK plod wanted to snoop around my Hotmail Inbox, they should have to get a US warrant for it (or a UK court order ordering me to turn it over, since I'm in the UK).
The alternative is just silly: is my personal website, on a server in California, subject to Vietnamese laws if someone in Vietnam views it? The bits of software I have for download are in English not in French, which would violate the laws in Quebec - I'm not in Quebec, my server isn't either, but the software might be used there: do I have to comply with their laws just in case someone wants to use it there? Of course not.