"Where in the US is the very best place for creating an English Cottage Garden?...basically I'm looking for a storybook setting - does that even exist?"

Well, did you find the storybook setting???

Although I have never been there, I've heard that the Portland, Oregon area is supposed to be full of beautiful cottage gardens.

I love the English Cottage Garden too. Am only able to do it here in Texas in the very early spring. Foxgloves, Delphinium. sweet peas, hollyhocks can all work but only as long as it is cool. Am going to keep working on this terrible clay based soil as MacThayer advised.
Artqueen

Can I second Wisconsin? I wouldn't live anywhere else.

The Chicago Botanical Gardens supposedly has a great cottage garden using plants that thrive in the midwest. Haven't seen, but its on the to-do list for this summer.

I would think that a place that has a similar climate, such as the Pacific Northwest on the western side of the Cascades.
I live near Seattle, Click on the link below for pictures of my garden.

Here is a link that might be useful: My Garden

I would say that the requirements for an English cottage garden would be adequate rainfall and seasonal change. You probably need a bit of winter as some of the traditional English plants benefit from some seasonal chill.

Here in California you occasionally see cottage style gardens but the palette of plants is a bit different. You emphasize plants that do not require winter chill, and can get by on less frequent watering. Substitute heirloom tea, china, and noisette roses for the European old garden roses. Use lots of lavender, the right salvias, and santolina which are drought tolerant. Wood chip or stone mulch instead of lawn areas, and mulch between plants instead of dense underplanting. You can still achieve a cottage look.

To be honest, succulent gardens and native plant gardens are more popular these days.

Rosefolly