Problems using bluetooth tether on a cheap chinese tablet
It's not a hardware issue.I had the same problem . Finally I figured it out. It's a bug. The JB device fails to register the connection parameters (DNS) for Bluetooth network after connecting to tethered device and uses DNS of default wifi connection to connect. So  the request fails with a timeout.

Rooted users can fix the issue using a set of commands in terminal, either using adb or terminal emulator.

Terminal Emulator or adb


Connect the bluetooth tether and install terminal emulator. If you are using adb, connect device to pc through USB (in debugging mode) and run the command

adb shell

to enter into the shell.
type "su" and enter. Grand super user permission to terminal emulator when prompted .
use the command "netcfg " to list the available interfaces. you can find the bluetooth interface in the list. It may be "btn0" or "btn", etc.
Set the network status of "btn0"(bluetooth interface) to up.

root@android:/#netcfg btn0 up
Run DHCP to get an Ip address.

root@android:/#netcfg btn0 dhcp
set the DNS of your choice.

root@android:/#setprop net.dns1 8.8.8.8;
root@android:/#setprop net.dns2 8.8.4.4;