You're right. I was misinformed. They are ethnically Jewish from St. Louis Park. Fargo is still a poke in the eye.
I saw Fargo long before I moved to Minnesota (several times in fact). I never felt at the time that the movie belittled Minnesotans. The main character (with the very exaggerated accent) was sharp as a tack. Even the two prostitutes (with similarly exaggerated accents) were portrayed as friendly and likeable. Jerry Lundergard was sleazy but there are sleazy people like that everywhere.