"For text ads, the system "reads" your copy and does a bunch of checks, probably thousands. Experienced advertisers who know the policies should have no problems getting their ad approved by the system almost immediately."
There are ofcourse some words that will get you into immediate manual review as most people know. Unfortunately there are very common words in different languages that are totally legit that will also trigger manual review since they mean something else in English.
"Should the system find something amiss, it will be escalated to a human reviewer. I assume that there are different levels. So a first line reviewer looks at it and either approves or it gets escalated to the next level where the process is the same. I assume there are three levels. If the top level reviewer (a supervisor) does not approve your ad, it never will be."
Here is where most people fail. The first line manual review often enough get everything wrong since they 1. are underpaid external workers. 2. Don't speak the native language. 3. Are dumb as cr*p. 4. Just click the first response that shows up in their Knowledge base which is not as good as Google Search.
However, there are not specifically three different levels as in terms of who outrules who, it is more about finding the correct person that can approve the ad depending on expertise. For example it would most likely escalate to a category expert (gambling, meds, alcohol etc) and he/she would most likely fail hard if it's not an American targeted ad. After that it would hopefully go to a local language expert which would know his stuff. Also worth noting is that the adwords policy on their support page is not necessarily correct depending on what country/language you advertise for. If all else fails, one has to find a local language category expert and get the ad approved, which is easier said than done.
"The time all this takes of course depends on how many ads need to be approved. If you are the 1000th in the queue, you'll wait longer than if you were 100th. You cannot control this obviously."
Money talks when it comes to the above statement,
"Image ads are all reviewed by a human and likely in a similar process."
The chances of getting image ads through are far greater than text ads.
"You ask specific questions that only someone working at Google in that capacity would know for sure.
Where is review team located? I don't think it matters. They probably have hundreds in different offices, different parts of the world. You would need reviewers for all languages."
All around the world yes, but the major bulk is in the normal outsourcing hubs.