Can you still track it's location after it has been wiped/erased? Can anyone clarify the process when a phone is wiped?

Let's assume that my phone gets stolen, and the thief being unable to unlock it chooses to wipe the device via a system restore in iTunes.  Since the phone is (was) logged into my iCloud account, the thief will be unable to activate it, which should make it worthless to sell, right?

So, assuming a stolen phone gets restored, during subsequent setup it requires a WIFI connection prior to then logging in to the iCloud account it is locked to, so it should be contactable.  At this point, will the phone be still trackable by my icloud account using find my iphone service after being restored, even though it is not technically logged into any iCloud account? Will the custom message still be displayed to whoever has the phone?
No, an iOS device is no longer associated with an iCloud account after it has been restored. 

In iOS7, there is a new feature called Activation Lock[1] which prevents devices from being restored once they are associated with an account unless the correct password is used to disable the lock.

[1]http://support.apple.com/kb/ht5818

After being erased, either by you via find my phone, or buy the 'new owner' via a DFU forced restore, tracking is no longer available.

If the phone is put into DFU mode then iTunes will restore the phone.  However during activation, it will still require the original apple ID to activate, so the phone is useless, apart from selling for spare parts.