Schengen "main destination"
 

So I have a problem. I'm planning a family vacation with my mother for the summer, but as a Chinese citizen with an American greencard, she needs a schengen visa. The problem is, we're planning on visiting Austria, which doesn't provide consular services in Boston. The necessity of appearing in person, compounded with her need to renew her passport, and thusly the need for her to travel to New York twice (since the Chinese will only renew a passport in person as well) is wholly impractical.
The question is this. Since we are planning on flying into Munich, then driving to Austria, How morally ambiguous or wrong would it be to make a refundable hotel reservation in Germany, enough to qualify it as the main destination, then cancel upon receiving the Visa from the German consulate in Boston?

Well..thats your decission..moral is not the question..
the visa rules say, that the Schengen country has to issue the visa, where you spend the most time..
its a little bit of "cheating" what you intend to do..
and what happens, if the authorities find out...
imagine ..some border police guy makes a spot check with your canceled hotel, because he does not like your face or feels something is wrong..then you risk to be send back...
But:
Check with the Austrian Embassy, if you can apply at the German Consulate for Austria. Sometimes they allow that if in your area there is no Austrian Embassy.

I agree with most of what you write, but a "border police guy" at MUC calling the hotel, etc., well, the chances for that happening are clearly lower that winning the first prize at any lottery. Such a scenario certainly should not be OP's worry.

You have worked out a workaround which should likely work, it seems low risk to me.

never won in a lottery? :)
you are right, but currently security is on high alert and they might randomly pick people and interrogate them..
the question is also, if the visa will continue to be valid, if the circumstances/preconditions are "manipulated"..
Thats the reason why I suggested to ask if the German consulate can be the issuer for the Austrian visa, as this is stated on the website of the Austrian Foreign affairs office for some cases

really? trying to get a visa deliberately under false claims ?
Would you also suggest that for someone flying to the US? ;)

Well if it´s her first Schengenvisa, the embassy/consulate has to take her fingerprints.
In China the german embassy can´t take fingerprints if you apply a visa for a different Schengencountry.
I don´t know if that works in the US.