Basically, in my story, Aliens bought the earth in a lovely bit of bureaucracy. They isolate groups of humans and try out different methods of creating super soldiers. Earth is still barely recognizable, basic locations are still used I.E. Georgia is still Georgia, but most if not all the towns have been changed for the experiments etc...
Would that still count as escapist enough to be approved or should I change the location completely to increase the likelihood of approval?

You're fine.

There isn't a hard rule that everything needs to be so escapist fantasy, you can't use a really world setting. Stuff that talks about current political climate and hot-button topics blatantly. If so, my stuff would have been disapproved because it's fantasy, but certainly not escapist(in comparison to the story culture here.) Though that's probably why I don't have a lot of readers because I'm not afraid to tackle some tough topics.

That rule is there for politics and religion content. You can have a story sat in a real world setting. If that were the case, then the hundreds of other post-apocalyptic, contemporary, and historical setting wouldn't even be on here.

What LJ said. 'Urban Fantasy' is pretty common here, and is generally, more or less, set in our world or a reasonable facsimile. 

The System Apocalypse stories are quite common around there. You just need to avoid the real-world issues. 

Of course you can have a story set in Georgia. You just can't reference political parties, politicians, religions, wars etc.

If RE: trailer trash can do well on this site, I don't think there is any need to worry about posting a non escapist story.