The rules are the same in NJ and NY. Your application is going to a centralized processing center in Vermont either way. You are correct that your overstay poses a problem, but your wife's impending citizenship could be a good thing. You should speak with an immigration attorney to evaluate your options. I would be happy to provide a free consultation.
1. Talk to a local immigration attorney right away. In Philadelphia, where I practice, VWP adjustments went through some big policy changes recently. While immigration law is federal, and therefore the same nation-wide, in practice different jurisdictions have different priorities for enforcement, and, sometimes, federal court decisions interpreting unclear provisions of the law impact only certain areas of the country, creating discrepancies in the way the law is enforced from place to place. In your situation, a few months ago it might not have been a problem to file for AOS as a VWP overstay, but now, I would make sure that you are not putting yourself in harms way by applying.