I see you've only posted two messages on the Rootsweb system (under this user name). I also looked for any posted family trees in your name to help possibly identify your Grandmother. When you post, you'll get more help when you fully identify the person you seek, and with some criteria information, such as full name (maiden) and date of birth. If the DOB is not fully known, parents, siblings or an approximation would help. This is ESPECIALLY important the more common the name.
In this case, actually looking for information on the "person" might be more of research value than a "place" that might be just "Family Lore." I've helped many that were EXACT on the EXACT place of birth, or residence of a person, only to find them somewhere else.
Your GM, have you attempted to obtain a birth record? In 1873, it is highly unlikely there would have been a birth certificate, but it does happen. Many elderly looking for Social Security Benefits, or to obtain a passport (must prove citizenship) often initiate a delayed birth certificate by use of church or other records, family statements, etc.
As far as any "Bloody" names in Nebraska, the US Geological Survey identified six, none in Nemaha County:
Bloody Creek (Streams) in Douglas and Rock Counties; Bloody Run in Gage and Sherman Counties (streams); Bloody Run School (Historical) Sherman Co, and Township of Bloody in Loup County.
Nemaha borders Missouri, the Counties of Otoe, Johnson, Pawnee and Richardson. Gage is just to the west of Johnson.
The US GS identified a Bloody Island, an Island in Osage County, Missouri. This location in Osage County is a distance from Peru, NE... But, there is a "connection" the river Missouri runs through Peru and connects with a river that runs through Bloody Island.
This leads to "conjecture" which has NO PROOF, but does allow some additional research. During the period of 1873, we are not only "possibly" looking to see why your GM was born in/near a Bloody Island. BUT, we are interested in where her parents were in 1870 (Census), where any of where siblings were born, where her mother and father may have originated. I could "GUESS" they just might have been in transit / movement using river transit. Grandmother might have been born in Bloody Island, or just a point on the river as they passed. Again, only potential research might identify enough clues on the family to help identify the "possible" location of birth.
So, I would suggest posting known particulars on your grandmother and try to set up a timeline on her family. Genealogy is like a criminal investigation, you MUST be very careful to develop "clues," not only from family lore, but documented evidence. One MUST develop SUSPECTS, but also eliminate those that could NOT be the Family member. There are so many family trees online that are WRONG and many connect to the WRONG information. One must be VERY CAREFUL about accepting undocumented resources. AND, also those "volunteer researchers" that are CONTINUOUSLY wrong, provide worthless links and false information. I have been trying for many years to clean up the available online errors, and "try" to keep those from adding to that mountain.
From the other poster:
The Nemaha Valley Museum... It is JUST A MUSEUM. Most do NOT do genealogy. http://nemahavalleymuseum.org/
The Nemaha Valley Genealogy Society. As normal the person's link does not work. Correct: http://nemahavalleymuseum.org/page3.php
They are just the people that run the museum...
Also posting from the west coast of Washington State.