I agree with a lot of this, but I might suggest Portland as well - here's why....
There's a pretty strong MUSIC market, though I don't know about people getting PAID, but music seems to be coming out of every door there.
They may not have as much infrastructure, which could be an opportunity.
There is some competition there as everywhere, but not like the big markets being mentioned, though I don't live there and I could be wrong. I'd steer clear of L.A., both because it sucks and the work is really shrinking (look around the board for the number of people asking/looking for work...).
Of course the climate might be a big problem for a lot of people...but Portland itself is pretty awesome and the people are great.
Just another thought in the stew......