Unless the purpose of your app is physically finding out who is nearby, you probably don't want it to be used that way. Stalking, harassment, and general creepiness are all facilitated by search-by-location features.
When search-by-location is necessary, it can typically be approximate, with common tools like giving approximate locations, search radii, fuzzing (adding random noise to location data), or minimizing the granularity of the location query you can request.
Granularity in this context should consider the volume of the response set, not the size of the area - a five mile radius might not be enough in Wyoming, and might be too much in New York.