I don't have an iPad, but I am able to have my Transformer tether to my Droid X no problem. I can give you the steps I use for that, I'm sure you could generalize it pretty easily to the iPad.
1) On Phone and Transformer: Settings > Wireless & networks > Enable Bluetooth
2) On Phone and Transformer: Settings > Wireless & networks > Bluetooth Settings > Make Discoverable
3) On Transformer: Settings > Wireless & networks > Bluetooth Settings > Click to connect to your Phone under "Bluetooth Devices"
4) On Phone and Transformer: Click "Pair" button to pair your devices
5) If they're not connected after this automatically, repeat Step 3
6) On Transformer: Settings > Wireless & networks > Bluetooth Settings > Click on the wrench next to your Phone's name and make sure that under "Profiles" under "Tethering" it says "Tethered" and not "Use for Internet Access". If it says "Use for Internet Access", click it to start tethering
The next time, since you've already paired your devices you can start at Step 5.
If everything works correctly, you should have the two Bluetooth icons in the system tray as shown in my screenshot. The one on the left meaning Bluetooth is enabled and the one on the right meaning that you are using the iPad's internet connection successfully.