I know it must be difficult to talk about this now (i.e. without even knowing about the "win-win" situation), but I just wanted to agree with others that, on one hand, yes, going into grad school signifies some sort of a "calling", but on the other hand, I'm sorry to say (because it muddies the waters a bit), so is love.
My girlfriend and I are in not-quite the same circumstances, but we're both applying to places and have applied to mostly the same geographical areas, but we (read: I) have a bad history with long-distance, and I think we're both incredibly skeptical of that outcome should we be in different regions. We're stuck waiting it out until we have a better sense of options. See more on long-distance sub.
What I will say is that you know how you feel about your SO and that I'm sure he's got some kind of understanding/hopes about what will happen. You really should talk about it with him and do your best to be honest. There may be a fork in the road or there might not be, but no discussion board posts can give validation or make the decision any easier. It sounds like you'd rather go to the school that isn't in your home city (otherwise why the dilemma of choice if you get into your home city school?) to me, but that the bonus for the other school is that it's in an area you like (what about the other area?) and that your SO is close-at-hand (how far apart would you two actually be? is this curable by a regular/irregular dose of weekend train/bus-rides?)
As for long-distance, I was in an MA program last year and knew a ton of people that fell out of love/their relationship, but some people that I never thought would last ended up lasting and getting closer and I also know people that stuck it out despite some HUGE blunders (read: me). There is a stigma, and rightly so, but don't let the stigma keep you from trying to keep something alive with someone that you love. Love conquers some of the time and it certainly can conquer the long-distance heebie-jeebies. If you decide it's too much, then no one can blame you. As if there aren't already enough cliched lines here, honesty really is the best policy, and that's up for you and him to work out.
*I say "him" and "boyfriend" throughout, but, honestly, I can't remember your SO's gender. Please forgive me if I've gotten it mixed-up.