I once critiqued someone's short story that took place in a post-apocolypitc New Orleans (interestingly enough, this was long before the hurricane) and because I had lived there I combed through the story to alert her to various inaccuracies. I also told her that I was engaged enough in the story that though I noticed the mistakes while reading, I liked the story and the characters enough to disregard them until I sat down to write the critique.

I think most people are pretty forgiving (unless they're mean and who cares about them), especially when the story is good enough to distract them. My best example is anytime I teach SCUBA Diving I go into a loooooooooooooooong rant about how the movie 'The Abyss' is the most implausible movie ever made(even beyond the aliens and the lack of proper decompression on the way to the surface), but that doesn't keep me from enjoying it. Of course, as I always end my rant... sometimes being completely accurate can prevent you from writing the story.

And the cool thing about not specifically naming a place as you've done, is you have lots of people who react to the familiarity and think 'Maybe this is set here...' instead of setting out to find the inaccuracies.