Would be interesting to check out the initial save. Yes I'd probably have settled on one of the hill tiles next to a mountain. Still, it's not totally obvious, and you had more limited map information when you chose where to settle than we have looking at this screenshot.
As for Brazil's city... it's annoying but I wouldn't call it a game breaker. Vienna's location is really good, which helps a lot to compensate. Even if there's nowhere else to settle you have the option of a comp bow rush. You could even attack with archers only (4+ at least), considering Sao Paolo's vulnerable position in flat, open land. If the city is too tough you can stay back, sniping workers and units and eventually tire Pedro into submission - possibly getting him to gift you the city for a peace deal.
Alternatively, if you can settle elsewhere then peace can be an okay option - the nice thing is that you can build caravans early and be guaranteed a reliable trade route yielding lots of early science. I'd consider that option.
Definitely nothing hopeless about this -- a little annoying but at the same time quite interesting.
