It would be interesting. In terms of scaling the books to the EU2 timeframe (although the dates would look wacky) you could spread events farther apart. Say a four to one ratio, then you could use the standard 400 game years to represent 100 years...
After all, you'd have horrendous BB (or have to reduce it by event) if you expanded Grantville to the USE in three years! (Even at this it'd only be 12). And you could do a lot with the Ram Rebellion, the Baltic War, Don Fernando's Netherlands, etc...
It almost cries out for a custom Europe-only map (maybe with the East Coast included... sort of an expanded version of the CK map - can you just see Grantville eventually recolonizing West Virginia?)... would allow for custom provinces including "Grantville".
As far as a location, judging from the maps in the books Grantville is rather close to Magdeburg and Nuremburg, so Anhalt sounds decent. However, they do refer to it in the later books as the "State of Thuringia-Franconia", so maybe the province normally used for those (I forget the name, but the one east of Mainz... Wurzburg? I think?). Or that could be used as a second province and the site of the Ram Rebellion events.
Might be able to tweek some of the game files to turn troop transports into ironclads, too, or adjust the CRT's so that high tech troops have a larger advantage... and a custom map would allow for navigable rivers (set 'em up as ocean zones, like you would in Civilization)............. hmmmm.....
You wouldn't want to (if you can avoid it) max out the techs for Grantville, though, because then it'd have uncontrollable inflation.