As an update to the post above, the host initially said they'd refund us the money but then later changed her tune and asked us to cancel and that she'd give us a full refund.
Either she's ignorant that if we cancel we get hit with the severe penalties (50% of our money + we don't get the airbnb fee back) that she has in place or thinks we're stupid.
So we just escalated to Airbnb and sent them a note explaining the location is incorrect in her listing and that we want to cancel and surprisingly Airbnb quickly responded overnight and gave us a full refund plus a token $22 coupon (original booking was $220) to use for a new reservation. The Airbnb rep also assured us that she would talk to he host and make sure the location gets corrected.
I'm surprised that with hundreds of reviews she has for her place that no one really complained that it's in a completely different location vs what is advertised. Initially I was afraid the host would use that line of defense (but hundreds people have never complained...) but I'm glad to see Airbnb acknowledge the misrepresentation and correct it.
So key takeways, raise your concerns even if you see hundreds of other people just grin and bear it. And secondly, it's tricky to find where you can contact Airbnb. For this type of issue you can submit the message like this:
From this page:
then type in your message, I included screenshots (hosted on imgur.com) of the wrong location + the actual location from her house checkin instructions in the message.