It seems to me that the relative adverb and the prepositional phrase with the relative pronoun as object (in which) are completely interchangeable here. But "where" is clearly not a conjunction.
I think "in which" is more common. I think of "where" in explaining formulae, "f = ma, where f is the applied force etc."
Is it really that obvious? This would still make sense, wouldn't it? Where a town was crowded with a whole bunch of clones, which is an extreme case, there would be practical problems. Anyway that is not what I really wondering about. I first thought it might be a relative
I agree with you about the comma. You're modifying the case on both ends. If you take away the "extreme," the comma goes away. "In a case where a town was crowded etc."
If you wish to keep the "extreme," I think you'd need to say, "In an extreme case, one where a town was crowded etc." (Notice that GG repeated "a case" in her example.)