some use cases require that the DNS result match the country of the requester so having the ability to go down to the country level is really important. In the large countries, going down the state/province level would be a bonus.

Being able to go down to a country level would be extremely useful. It would give us more control over how we define our regions.

Another example: Sao Paulo is geographically closer to Cape Town than to New York City.

+1 for custom geo groups, it's the only good solution. Without custom geo groups, which POP (point of presence), London or Cape Town, would you direct a visitor from Tanzania? Answer: London, despite Cape Town being geographically closer (First Closest) as well as being on the same continent. There is no way for Rage4 to know about everyone's worldwide POPs, and First Closest works on Longitude/Latitude not Internet'ude (i.e. peering).

It would be nice to be able to create geo groups where you can define your own groups of regions so you don't have to assign multiple regions at a time. Especially in situations where services would have typical datacenters that would have to be redefined each time.

The Europe is already split into subregions (North, South East, West).
Take a look on subregions listed here http://gbshouse.uservoice.com/knowledgebase/articles/114370-rage4-dns-geo-regions-global-