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So the love of a woman several rungs on the social ladder above him constitutes idealism? I believe that is a false reading of the word. I believe the correct term would be ambition.
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Consider the conversation later when he's on the phone, and he says something like "If Chicago is his idea of a small town, he's no good to us." So he does know geography. Which means the point isn't that he doesn't know geography, it's that he has callous and situational disregard for the truth.
Further, the discrepancy between the idealism of Gatsby's youth and the bootlegger criminal he became is the core of the novel. The whole point of the book is that he never realized the potential of his youth in the face of unattainable love and massive corruption of the times.