You're right: geography certainly is huge. I probably should have noted the geographic distribution of energy sources as the other major decentralizing pressure in mining. But it's also true that pooling can lessen the effects of geography.

One of the worst case scenarios would be a light, but mostly acted-upon agreement among the top four or five pools to exclude transactions from OFAC-sanctioned addresses coupled with a lackluster outrage from hashers where few of them actually switch pools.