I received confirmation today that it is working--and tried it out myself by looking for people with the last name of Green in Linn County, Missouri. You can click here to take you directly to the search results
This is a big improvement and I'm glad this is now working--the ability to preform searches such as these significantly adds value to the Ancestry.com site. This is especially true for those of us who are looking for people in broader areas with unknown first names, in addition to other search needs.
A partial screen shot is shown below. Those who tried the search before it was fixed will remember that results were coming in from Kentucky, Pennsylvania and elsewhere.