Eh I personally perfer to have the locations managed in a seperate part of the module. It forces my end users to make global changes / edits. If my users could just type in the location information. I would get all sorts of messed up isssues, when it came to updating an event's location. Cause sure enough I would have someone just make the change in one event even though the location needed updating for all events.

I can see however how it would helpful for some users to just type and call it a day. I have at times myself wished I could do such a task. If implemented it would be nice to have a setting put in place to allow the host / admin decide what user groups could use free text vs being forced to use drop down only.

Perhaps have a "add new location" link next to the drop down, and either display or hide the link based on user group?

If you click on the link it can just unhide a control panel which holds the add location module controls in it. Thusly saving lots of coding and ensuring the location data is saved in the same table.