'La-la land'

The American Heritage Dictionary of the English Language (Fourth Edition 2000) says that the etymology of 'la-la land' is "after L(os) A(ngeles)" and defines it as:
1. A place renowned for its frivolous activity.
2. A state of mind characterized by unrealisticexpectations or a lack of seriousness.
Is this not something of an insult to the people and city of Los Angeles, or don't they even know (or care) that 'la-la land' is apparently named after their city?

Christopher