Now I'm thinking about legal/contractual rules that might force that kind of geographic risk.

I mean, logically you could have the Allowable Location send pre-encrypted backups to anywhere in the world, except (A) laws and regulations aren't always logical and (B) you still have the problem of keeping the decryption keys somewhere safe without leaving the key jurisdiction.

They could, of course, open other regional data centers in other countries, or say "data in this geo zone may be in any of X, Y or Z" countries, but for the latter that pretty starkly limits some of the major customers they'd have, I would guess, and for the former, well, they have other geo zones already, so if people weren't replicating to them, I'm not sure why adding me-east-1 me-west-1 me-central-1 would fix that issue, they just wouldn't replicate there either.