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Is this actually an issue? I'm very doubtful.

Yep and the physical location of the ip counts I had the devil of a time getting a .ie site to rank in google uk a while back.

The physical location of a server is increasingly less and less of an issue (see: CDNs).

As you mention, though, ccTLD choice is another story entirely.

It actually is a real issue. Google says it themselves - they give priority to gTLDs.