Gambler, a certain level of fat is necessary for health reasons and beneficial to fat loss. What I was pointing out was that the ketogenic diet does not have to be a high fat diet, which is the common misinterpretation most people make. In most cases it is high fat, for several reasons, including better tasting food choices, higher calorie intake if needed, etc.
The maximum amount of fat intake which seems beneficial to meeting EFA's and maximum testosterone production is 30% fat, anything above that is fine but may not offer great benefit. Below that is ok as long as it doesnt get too low (15-20% should be bare minimum in most cases).
So yes, more fat is beneficial for some and some people report better fat loss w/ a higher fat intake. On the other hand me and many others i've spoken with do better on a lower fat intake, while still keeping carbs very low. I believe much has to do with ones ability as a fat oxidizer (as well as other possible metabolic abnormalties with fat metabolism, but they are fairly rare).
Devils*Angel, like kid dynamite said the ketostix but they aren't always reliable, but are a good starting indicator. Other indicators are "fruity" smelling breath in "some", or a blood test to measure the level of ketones.
If you eat 70% fat and aren't in ketosis, you should still technically be able to lose weight as long as calories are below maintenance, and carbs are kept low. The problem w/ high fat and carbs is the insulin spike from many carbs along w/ the fat which allows it to be easily stored in adipose tissue. For most people after a carb up it does take a few days to get into ketosis, depending on several factors. The process can be sped up by different types of workouts which will deplete liver glycogen, which is the primary factor necessary to get into ketosis.
Not eating enough fat won't screw up a ketogenic diet as long as other rules are followed, mainly low carbs and moderate protein.
Understand that in ketosis the body is physiologically in the optimal state to burn fat for energy. This being so a calorie defecit is still necessary and the rate of fat loss is generally related to the calorie level of the diet and secondly to the level of carbohydrate in the diet. (assuming adaquete protein).