"Don't bother just to be better than your contemporaries or predecessors. Try to be better than yourself.” ---Faulkner
Need I say more? But let's see. If expanding your school list is not a problem definitely go for 'em top ones. But more than ranking or location, as you may know, it's the fit that matters. Like you've been suggested Duke, Emory Vandy are good schools in the South. You could definitely study Southern lit let's say at Harvard, UChicago or even Columbia. I second what echo449 has mentioned that you might not be able to attend seminars specifically for Southern lit in schools outside the South. In any case, it's good to at least apply outside Dixie and see what's on offer.
You might know that Prof. Jay Watson (Ole Miss) went to Harvard, Leigh Anne to UChicago and Adam Gussow to Princeton.
Can't say much about the job market but it's definitely hard to get one, especially in academia. But don't let that dissuade you from dreaming big! Good luck!