I'd probably put it somewhere in the Shadow Marches.
It's still a frontier, but there are towns like Hommlett and (especially) Nulb. There are even swamps and marshes. There's already mysterious nastiness there. There are fiends nearby (nearby on an Eberron scale, anyway). The fabric between the planes is thin there. There aren't any hugely powerful organizations or NPCs to run to for help, so the PCs will mostly be on their own.
Personally, BTW, I'd probably put a daelkyr behind it all.