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Combined real-time hardware-in-the-loop simulations and modeling of communication networks (co-simulation platforms) is a powerful testbed for development and validation of relay protection schemes utilizing communication links especially for applications in Smart Grids. This paper introduces laboratory tests in such environment of a new protection scheme for medium voltage networks with distributed generation. It is based on impedance measurements with compensation of remote infeed currents and high fault resistances. Since the scheme utilizes multi-terminal measurements, a communication network emulator has been developed to model Ethernet network impairments. The test method uses Monte-Carlo approach for evaluation of protection dependability. The results demonstrate enhancement of impedance relay performance compared to the conventional protection. Moreover, fault location capability is preserved with sufficient accuracy. Nevertheless, communication network imperfections, such as jitters and data loss, deteriorate scheme functionality. [ABSTRACT FROM AUTHOR]