then it was with one of the other israeli cities, my point stands. Many of todays gedolim are unfortunately puppets when it comes to most of the modern issues they don't know anything about no matter how holy they are and how brilliant they may be
that's stupidity. any city that's part of eretz yisroel, rav chaim is well familiar with. the man knows tnach better than you know your name. if the state of israel decided to call a city by a new name that's not biblically accurate, then there's no reason why he should be familiar with it. so no, your point doesn't stand.
in terms of the general agendas of those that surround the gedolim... ya, it is a problem, and taints everything that's supposedly said by the gedolim. in terms of the above sign in particular, whether rav chaim said it or not, it seems pretty simple to me. if you live in a makom where the chachamim have assured it, as platinumguy pointed out, then you're definitely a poretz geder by having one, and all dinim of a poretz geder apply.
the only chiddush in what he "said," was that you could daven with them; a kulah!