Mac Kung Fu:

It’s been known for a while that if you bunch two fingers together while using the iPad’s on-screen keyboard, and slide them around, then you’ll turn the text cursor into a semi-mouse cursor, allowing you to move it around freely. The keyboard lettering will disappear to create a trackpad area.

Well, when an external keyboard is connected (or attached), you can use the two-finger trick anywhere on-screen to move the cursor around. Give it a try. You don’t have to limit your fingering scope to where the keyboard usually is.

This is brilliant. Just tried it. External keyboard in place, type, type, type. Then, reach over and touch the screen with two fingers, slide around, and the cursor moves as advertised. Love this.