They place the top seeds first, giving them preference to close to home for the first two rounds. They don't really care if they end up with duds in Denver. That may affect the time slot for TV, but they don't care about in-person attendance. I think last year one of the ET sites ended up with the latest tip off times.

For example, if Auburn, Duke, Houston, and Florida are the #1 seeds, then...

1 (1) Auburn -> Lexington, KY for Round 1 and the South Region 
1 (2) Duke -> Raleigh, NC & East Region
1 (3) Houston -> Wichita, KS & Midwest Region
1 (4) Florida -> Raleigh, NC & West Region

2 seeds get first/second round closest to home (as available) but then slot backwards in the regions to the top seeds. So Auburn should get the last two seed, not a higher one.

2 (5) St. John's -> Providence, RI & West Region
2 (6) Alabama -> Lexington, KY & Midwest Region
2 (7) Tennessee -> Cleveland, OH & East Region
2 (8) Michigan St. -> Cleveland, OH & South Region
3 (9) Texas Tech -> Wichita, KS & West Region
3 (10) Wisconsin -> Milwaukee, WI & Midwest Region
3 (11) Maryland -> Providence, RI & East Region
3 (12) Kentucky -> Milwaukee, WE & South Region (Note how Lexington, Raleigh, & Cleveland were full, so they get Milwaukee)
4 (13) Purdue -> Denver, CO & West Region
4 (14) Texas A&M -> Denver, CO & Midwest Region
4 (15) Arizona -> Seattle, WA & East Region
4 (16) Iowa State -> Seattle, WA & South Region

Because of what you mentioned, very few top teams in the west, there's likelihood that teams from our conference end up out west making one less place in the bracket where we can be placed. In this example, if we're a 5, we'd likely end up in Denver, but if Iowa State and Arizona end up in Denver, then Denver is off the board for us.