Generally speaking, around here if you're saying a town name the way it ought to be pronounced, you're saying it wrong.
Key example: Gruene. To the educated-but-ignorant, this one is a no-brainer. Why, that's the German word for "green," you might be thinking, I happen to know that's pronounced "groo-neh". Only, it isn't. It's pronounced "Green." God alone knows why.
However, that's not actually my favorite town name. True story: Back around age 16 or so, I was sitting in German class when the teacher, pretty much apropos of nothing, said that Schertz was the German word for joke. (Much like Gruene, which has been stripped of its umlaut--the e-after-u lets you know it should be there--Schertz has been Anglicized by appending a T so that you pronounce the Z properly.)
I'll confess: I did not believe her at first. I had to look it up in my dictionary. But of course, Germans do not have a sense of humor, and I should have known better than to think she was trying to pull a fast one.
Ever since, Schertz has been my favorite of the local small town names. Chances are, much like Gruene, Schertz was named for someone, but in my mind's eye I see a young German émigrée, newly arrived from Munich perchance (Bavarians fucking love Texas) looking out over the scrub brush and shimmering heat of what was to be her new home, turning to her husband and saying "Das muß ein Scherz sein."