@hingehead,
That's what it means! The question might be: "Where's my pen?" and the answer was invariably: " Is my face red?" which was a sort of short hand for
" Well, it's not up my ass! (How should I know?) ". Very common in Britain and Ireland but not used much these days. I mean I haven't heard anyone saying it in years. Although there was an old black and white British movie on TV years ago where one of the characters actually says : " Is my face red?". I wondered for years what it was supposed to mean. Like you, I think it does sound a bit strange. The leap from asking a person where someone or something is to getting an answer implying the possibility that the person or thing asked about was not up the rear end of the person asked, does seem weird.....If you follow my meaning.