How does Ditto work with regards to Pokemon Sightings?

Ditto will appear as another Pokemon (Rattata, Pidgey, etc) until it is captured, including in the Sightings feature.

But if there is also a real Pidgey nearby, will the Sightings show multiple instances of Pidgey? That is, if two Pidgeys were to appear in the Sightings, we could reasonably infer that a Ditto masquerading as a Pidgey was nearby.

The answer is NO.

Some additional background follows. Currently, there are two versions of the "tracker" feature, the new one (where you see Pokémon at Pokéstops) and the old one (where you see Pokémon regardless to whether they are at Pokéstops or not). The new one was first rolled in San Francisco, recently it's been expanded to more US states, parts of Canada and Australia. The new one lists multiple instances of Pokémon in default (e.g. multiple Pidgeys), while the old one does not. Therefore, I assumed you were referring to the old tracker which is also what I am running right now (being situated in Europe).

An hour ago or so, I ran into a group of 3 Pidgeys and one of them was Ditto. Before I caught it, I checked Sightings and I am sure there was only one instance of Pidgey shown. It would strike my eye otherwise, because there was only Pidgey and Eevee in Sightings, so I would notice Pidgey being there twice.