What's it not an exaggeration of? Chicago totally has Dead boy armored troops in flying skull carriers, right? 100% completely normal.
Just having wild stuff doesn't make it a
parody. There has to be a
joke there. What you are describing isn't a joke, it's an aesthetic. An exaggerated one, a pastiche, but just that, and not one that has anything to really do with
Chicago. There's nothing necessarily being made fun of, especially given that the skull-o-mania aesthetic can be done unironically: just look at 40K, which may have started out using that aesthetic ironically but over time morphed into using it rather unironically.
Same as the UP being a bastion of civilization.
Just making a place that is rural and backwoods into a thriving industrial power doesn't necessarily mean it's a
parody, unless they are actually making fun of the area. Like, do they have a pasty on their flag or something, because from what I can find I don't think it's actually making fun of it.
To give an example, OCP in the Robocop series is a parody of corporate culture, but you can't just have an evil corporation that only cares about the bottom line and nothing else; there's no
parody in that. It becomes a parody when you have the CEO looking down from a balcony on his new crack-powered police robot with the brain of a druglord massacring innocent civilians and cops and his only response it to calmly say "This could look bad for OCP, Johnson. Scramble the best spin team we have."
This whole thing started with the idea that "Midwestern humor is really dry" and I went "No, I grew up a drive down 696 and a turn onto 275 away from KS and I don't really see any unique Michigan humor here". If you wanted something like that, he'd make a magical healing elixir with a ginger taste that cures all minor aliments.
That's not to say Rifts has
no parody, but I just don't see it here and I don't think it's because it's some sort of regional humor thing.