The rest of Texas is fine. I mean how much does what goes on in Houston/Dallas/San Antonio affect your daily life in Austin?
But, my big caveat to moving to Texas (I live in Houston) is that, unlike Boston or DC or many cities, there is not much within driving distance that is interesting. It's a reasonable flight to most of the U.S., but it'd be better to have those things "in your back yard". Austin is much more "interesting" than the other cities in TX. But, we have a hard time getting people to visit us in Houston.
Aside - have you ever lived in the South? Seems to me that many/most Northerners think the South is just a bunch of backwards hicks. Not true, but you'll never convince them otherwise. But, take ATL for example. The amount of 'transplants' there is incredible. Lots of Northerners escaping high costs and cold winters.
btw - research Chicago a little more. You'll find the tax burden is higher than you think. Around 8%-11% sales tax, 5% income tax (raised from 3% about 4 years ago) and 2% prop tax on market value (they base it off something else, but it comes to about 2% of market)
But, to the nest egg question - rather than think about it in terms of egg (since it doesn't appear you are there yet, haven't had the kids yet, etc.) just try to save as much as possible. Seems your thinking is a little cart before the horse.
RE college savings - at first, I thought I'd save enough for a compromise - out of state public. But, those are now almost as much as any private. I now aim for in-state since we have quality schools. I'll tell 'em 'do well at UT and you can go to grad school (free) almost anywhere". My reasoning is thus - if it comes down to working a few more years so my kids can go to any school without cost (i.e. I pay), then nope, sorry, UT, Texas A&M are fine....you can pay the difference.