
BitTorrent already tends to prefer closer peers (from among a rather random list), but does so in a gradual and heuristic way (the slot and choke algorithm and like-peer matching -- give it 30 minutes or so and the peer pairs in constant trading relationships are likely to be close to one another).
The IETF recently established the TANA working group to use ISP topology information to help guide peer selection. Plus the Azureus plugin called Ono is a working implementation and research project of another method.
But ultimately, closer is not always better and, where rare pieces are concerned, even healthy. Any recognition of nearby peers will have to be a bias rather than a restriction or these ideas won't work very well.
Robb Topolski
Pascal is a language for children wanting to be naughty. -- Dr. Kasi Ananthanarayanan