I agree that the lower tier quests should give things relatively close, while the higher ones send you farther away (and presumably, send you into more dangerous areas). Personally, when i hit the trader, I take the quests that are closest to me first. I almost never take a quest that's 1km or farther away, until i have reliable transportation. It just takes too long to hoof it 1.8 miles and back, especially since I try to complete them in the same day they're given. Granted, that's a personal preference/limitation, but it at least makes sense to me.
To piggyback on Roland's point about people just taking all short distance quests, the most immediate fix would be limiting people on the number of quests they can take per day, at least initially. Putting perks into Daring Adventurer, for a hypothetical example, could give the player additional quests they could complete per day, or see the rewards you can get before setting out. This gives you some incentive to choose a quest that would yield more useful loot, and add additional functionality to perks (or perks that could be added later on). If a player had a choice of 1 quest to undertake, it would make which one they pick all the more meaningful.