Calendar Mac/iPhone timezone support question
Time Zone support allows you to view and set events in a time zone other than the one in which you are currently located.   The time in which you are viewing events can be set in the time-zone support preference.   

Events created whilst time-zone support is off default to the native time-zone of the calendar which was set when it was created and turning time-zone support off lets the iPhone automatically shift the times of appointments to the local time.

A good explanation from apple of the time-zone support can be found here and here.

As for the design rationale, I believe that the confusing naming originates from the development of the feature in iCal.   When the feature was built into iCal iCal displayed events in the time-zone of the computer clock which was set manually.   Enabling time-zone support permitted "power users" to set the iCal time-zone independently of the computer clock.  

If you want your events to act in the way you describe you must disable time-zone support and remember to enter the event times in the local time of the location in which you set it.   Alternatively you must enable time-zone support, change to Eastern Time, enter the time of the event and alert in Eastern time, then disable time-zone support.

One thing to note is that time zone support can be simultaniously enabled on your computer and disabled on your phone.   If your calendars are synced with iCal this allows you to use the computer to enter the event into the calendar and have it behave as you expect on your phone without mucking around in the settings all the time.