but a title like 'The Bhaalspawn' or 'The Alaundo Prophecies' would've covered it better.
Sure..if you are a hardcore FR fan and have read everything dealing with FR..it might have covered it better. But Baldur's Gate is a somewhat major city in the FR setting, so people that are relatively new to playing in the FR setting would have heard of Baldur's Gate, Icewind Dale, Neverwinter, Waterdeep (especially Waterdeep where it seems almost every pencil/paper game starts from), Amn, Cormyr, and so on.
Here is another example which worked..the movie trilogy entitled...
BACK TO THE FUTURE
The first BttF movie went from the 1980's back to the 1950's (didn't go into the future yet), the 2nd one made it into the future..something like in 2015 or something like that (marty mcfly looked to be about 20 or 30 years older than he was in the first movie, and he had kids that were in their late teens), then the 3rd one hit and they were sent back into I believe the mid 1800's.
Sure, it used the same characters, same concept of going through time..but in the 3 titles, they went into the future only once..now that being said..the BG game does deal directly with the city of Baldur's Gate atleast once..and it's sequel deals directly with the previous title, so there is the connection there..so if there is a prequel dealing somehow with the story, or even being where Baldur's Gate will end up being built..then it is well deserving of having the name.
See..if you truly look at it..the BG series dealt directly with Baldur's Gate once. Icewind Dale dealt with the city of Icewind Dale once, Neverwinter Nights dealt with the city of Neverwinter once. If anything we should just rename all of these games to..
"Forgotten Realms: Baldur's Gate Chronicles"
"Forgotten Realms: Icewind Dale Chronicles"
"Forgotten Realms: Neverwinter Nights Chronicles" (Even though..Shadows of Undrentide didn't relate at all directly with NWN, and Hordes of the Underdark dealt directly with Shadows of Undrentide with only a couple of the NPCs from NWN showing up..not even the supposed "Hero" you played was mentioned.)