My first piece of advice would be this: don't bank on YC funding. Sure, it would be great if you got accepted, but that shouldn't stop you from pursuing your idea. Especially if it is still just an idea - work on it at home, in your spare time, and then evaluate your options once you have done everything you possibly can do on your own.

If you decide that you need outside funding, and even Mountain View is too far, then your options for YC (or a similar program) become more limited. The next YC round will be in Cambridge, but there is TechStars in Boulder, Colorado which is obviously much closer, but may still be too far. The only other programs I have heard of are in the Philly / DC areas.

Like you said though, there are more traditional routes. A Google search for 'arizona angel network' brings up over 2m hits. My point is that, I'm sure there are options, you just need to look for them, and then evaluate.

First things first, though: start hacking!