Yes, you wouldn't want to start prepping to leave if you have no place to go. The way you were talking, I thought that it was a foregone conclusion that you'd be able to find a slot. Since there is the possibility that you won't be able to find a 2nd year spot in the area that you're interested in at all is this really worth it? Would you want to repeat the process and try to find a 3rd year spot next year it it doesn't work out this year? I don't know what your situation is but it seems like a lot of bother with little upside. With your internship done, another 2 years and you'll be free to go and live whatever you want. Or I guess you could go to your desired place by trying to re-match there and enter as a 1st year again. Unless you are changing specialties, that seems like a waste.
Consider also the hassles of moving, finding a place to live, relearning a hospital system... I get a headache thinking about it. I have to think that the place you matched at isn't horrible (if it was so disagreeable to you, you probably shouldn't have ranked it at all) so you might chalk this up to experience and write it off for now. Two more years isn't much in the grand scheme of things.
The lesson here for all the soon to be 4th years is to get your priorities sorted out early. If where live is of top importance you should rank transitional/prelim spots in your target area after all of the categorical programs in your desired area. It's a much easier path to latch onto another 2nd year spot if you are already in. It seems that PD's have some flexibility on their 2nd and 3rd year numbers-- I know my PD has created 2nd year slots for exceptionally good transitionals and prelims who wish to stay on. I'm not sure how that works, but I've seen it done.