http://www.lmunet.edu/dcom/about/mission.htm
" * Graduating Doctors of Osteopathic Medicine;
* Providing a values-based learning community as the context for teaching, research, service, including osteopathic clinical service, and student achievement;
* Serving the health and wellness needs of people within the Appalachian region and beyond;
* Focusing on enhanced access to primary care for underserved rural communities;
* Investing in quality academic programs supported by superior faculty and technology;
* Embracing holistic care, diversity and public service as an enduring commitment to responsibility and high ethical standards. "
Part of their mission is trying to put people back into the Appalachian region. That's a big reason for the setup of the curriculum and location of the school.
If you watch the video on the site it has Dr. Stowers talking about them wanting to attract students from the Tennessee et al region.
That being said, I don't think they're only going to accept those from the South. What was made clear to me was that the overriding goal was to produce quality physicians.
However, I think it certainly would help your application to have some tie to the region. Perhaps not as much as Pikeville but I'm sure it helps.
All I can tell you was that at my interview date there were people from Tennessee, Virginia, Florida, Mississippi, Missouri, and me from North Carolina.
There are obviously people accepted to the school from different locations but I think at the end of the day that occurs because DCOM believes these people to be a good fit.
I think it is reasonable to believe that people from the region around DCOM might be more likely to be a better fit for the school.