Where does current go after flowing to earth?
Yes, it will.

If we assume zero capacitance between the two half earths, then it will show the full fault current. 

If we assume some capacitance (it might be amusing to calculate the capacitance of two parallel plates, half-earth size, 1m apart) then some of the AC current will flow through the capacitance, bypassing the ammeter (assuming the ammeter has a finite impedance).

Of course we don't need to suspend gravity and assume a Vogon with a large chainsaw to get isolated 'earth' regions. If you have a large mass of granite, or other impervious rock, separating the bit of soil you've driven an earthing conductor into from some other remote conductor, then you will be able to generate an appreciable voltage if you try to force a current from one to the other. Good earthing benefits from damp conditions down to the water table, dry rock is a lousy conductor.