No, the module doesn't require an admin to create fake profiles. The module works with any of the existing profiles on your site. In theory end users can try to contact a profile that has been put online automatically and since that profile won't respond - a user might think that this is a fake. But other than that there is no way to guess that a profile has been put online by a script.
The module does not generate fake profiles. It just takes existing profiles and puts them online artificially. This means that if all profiles on your site have pictures then those, who will be put online also will have pictures.
In the module's settings it is possible to enable "pictures only" mode, in which the module will be putting online only those profiles which do have a profile pic set and will be ignoring those who doesn't have a pic.