Ehhh, I've heard this arguement before. I am 99% sure Rome was famously referred to as "the city on 7 hills" around the time of John. Furthermore I would say:

1. It does not make sense to depict Jerusalem as a woman sitting on a beast with seven heads, interpreted as a city which sits upon seven hills. If the woman is a city, and the city sits upon seven hills (17:9), then the woman is Rome (Septicollis Roma). How can we say Jerusalem ever sat on Rome? Rome was ruling over Jerusalem, and then destroyed it! The most natural interpretation would be, Rome sits on seven hills.

2. Jerusalem, the City of David, Zion, is recognized by all except Dispensationalists as a figure or type of the church. If Jerusalem is, later on in the Old Testament, depicted as a harlot, unfaithful woman, dressed in scarlet, etc., we should understand this in the New Testament to be descriptive, not of the city of Jerusalem, but of a false and heretical church -- Rome.

3. This would be in keeping with the description given of the Bride of Christ in this same book: it is not a faithful city, but the true church of Jesus Christ. Because of the contrast present between the two, the whore and the bride, it is not descriptive of a faithful city vs. a faithless city, but of the true church vs. the false church.

4. The Romish church has persecuted far more than Jerusalem ever did -- it is she who has been made "drunk with the blood of the saints." Rev. 18:24 does not say "all the blood of all the prophets," but "the blood of prophets, and of saints, and of all that were slain upon the earth" -- which, if taken literally, would apply to neither Rome nor Jerusalem. But Papal Rome has, through the centuries, been guilty of the blood of those performing the prophetic (i.e., preaching) ministry. Although the Jews of Jerusalem sought to kill our Lord, it was only by the Roman power and authority that He was crucified. They literally annoyed Rome into doing it!