I read a while back that the show's creators went with Starling City because they felt Star City didn't sound realistic enough. Doesn't make sense since when they namedrop places like Coast City (or was that Central City?).
Anyway, I thought this week's episode was great. I really liked the flashbacks, and this is the first time that I really liked Malcolm as a villain, and not been into him just because I liked Barrowman on Torchwood. The look on Oliver's face before the turned to face Malcolm was priceless. He wanted to snap his neck right then. I'm guessing he'll get his chance soon.