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Ya it's an odd phrase. It's obviously just indicating the location of the find, but why does that need to be in the title?

Because "Paleolithic people living in the place now known as France" is longer, clunkier and conveys the same meaning.

It's also not really "inaccurate." We say "Irish prehistory," native americans, etc.

Paleolithic Europeans, or West-Europeans, would have been fine.

How is that different, besides being less informative? They didn't call it europe.

France is an administrative concept, Europe a geographic one.