1) Many companies want facilities that are physically accessible to them, it's very difficult to sell to these companies if they'll have to travel 900 miles to do any work and don't trust the provider to do the work for them, or simply don't want to pay for it. Given the target market for hosting, Fremont's a pretty good option.
2) Depending on the service, a datacenter is only as useful as the transit providers you can access. We do all our hosting at a Chicago facility where we can get a cross connect to any bandwidth provider you can think of. Our services are also targeted at end users, so we're better off being centrally located and using providers with extensive peering agreements (less latency, woo!). If we had serious computation requirements rather than delivery requirements, one of those spiff Icelandic datacenters might be a good choice. I'm unsure of what Google and others stick in their rural datacenters, but I doubt it's anything that slows down your experience.
It is probably going to be almost impossible to have a "carrier neutral" hotel in rural Oregon but you might get a single ATT or Level3 or if you're really sucking it, a Cogent line.
HE Fremont is specifically great for reaching markets in APAC and HE itself is pushing IPv6 quite hard and so is one of the few providers that make it widely available.
Fair enough, but there's plenty of middle ground between Prineville and the Bay Area. The latter is expensive - it makes sense to have the really high-end things there, like Google R&D, not commodities like data centers and factories.
IMO. I'm certainly not an expert in that sort of thing though.
Incidentally, as a native of Oregon, I still think it's pretty funny that Facebook is building a center in Prineville, heretofore best known as the home of Les Schwab "Free Beef!" Tires.
But you are definitely right that most people don't need that kind of silliness.
I came from North Carolina where Google and Apple saw the lower power/employee costs as a reason to open datacenters. In the western part of the state is a beautiful city called Asheville which was never known as a network hub. But because of the geographic location halfway between Atlanta and DC a company(uberbandwidth.com/netriplex) decided to create a datacenter there. Lower costs...but the only way IN and OUT of their network was a backhaul through Atlanta or through DC. If one of those backhaul lines go down they've basically lost their single selling point.