Why didn't they just go ahead and make it a movie about Vietnam? Was that really such a taboo subject in 1970?
Bingo. That's exactly the reason they didn't switch if from Korea. It could be even more removed. The original Death Race 2000 was actually a weird roundabout commentary on Vietnam, according to some of the people who worked on it.

Because it's based on a book by a Korean War surgeon who wrote about his experiences during the Korean War. And as others have said, it is a metaphor for Vietnam and all wars.

The film was a metaphor for Vietnam and they did not go for realism.
It's that man again!!

While the Vietnam War was on, there was a real reluctance to make a film about it. At least directly. So you had films that were allegories of Vietnam but superficially Westerns or purported to represent earlier conflicts like Korea.
"Chicken soup - with a beep straw."

The producers didn't have the guts to make the film about the Vietnam war which is waht this film has as the look and feel of. They were smart in playing to both sides of the political fence.

"So you are saying if we all become cynical and sarcastic, there will be no more wars?"
I dont think so. What was saying, was probably more along the lines that no amount of movies is likely to stop wars from being fought, but I certainly wouldnt fault the filmmakers for trying.
"facts are stupid things" - Ronald Reagan

lol.ok.i'll bite..so you are saying if we all become cynical and sarcastic, there will be no more wars? The news flash of the day for you is that there aren't enough smart people in the world to understand sarcasm, so I elude to the fact that yes..war is a sad part of life

"But war is a sad natural fact and no anti-war stuff is going to change it".
Yeah. So lets not even try. Besides, the more anti-war people there are the more difficult it is for politicians and other as-holes to start wars. And movies are one possible way to influence peoples thinking and not just for the worse.
"facts are stupid things" - Ronald Reagan

I'm guessing it was much cooler to be mysterious. Really..I agree with yousadly for the whole book and idea of being anti-war..i just don't get it. I am not a fan of war, as I have been in servicebut war is a sad natural fact and no anti-war stuff is going to change it. Wars happen.

You have to really look at the zeitgeist of the time. How many movies can you think of that dealt with the Vietnam War that were made during the Vietnam War? - AndrewHNPX2
The only notable film about the war that was made during the war that I can recall offhand is
The Green Berets
starring John Wayne, which can hardly be called subversive although it was made as a reaction to the growing opposition to the war.
You make an important point about the
zeitgeist
. The fact that popular opposition to the war occurred at all is almost unprecedented, at least to the degree that happened with Vietnam. Historically, there had been opposition to previous warseven to "the good war" (to borrow Studs Terkel's phrase), World War Twobut not at the scale of Vietnam, let alone its exposure as the first "television war." Compounding the issue is that there never had been a war like Vietnam before, with no clear objectives and confusion over who the "enemy" really was in a place halfway around the world.
In hindsight, it's easy to look at the 1960s as being a radical time that broke down many barriers, but change takes timethe decade may have initiated fundamental changes, but their impacts were not truly felt until years afterward. Moreover, those changes were hotly contested. Recall that Richard Nixon was elected president in 1968 as a law-and-order man who represented the "silent majority," clearly a reaction to the social and political changes put forth by the various movements.
As other posters have noted, the motion picture studios were part of the established order, and maverick flimmakers such as Robert Altman, Francis Ford Coppola, and Martin Scorsese were just becoming established themselves, meaning that they still had to work within the system.
This extends to war movies as well. Historically, films made about a war as the war was still in progress have been "flag-wavers," or films supporting the war effort. World War Two provides the best example as the objectives and the enemy were clear, and there was relatively little opposition to the war effort.
Two notable exceptions occurred during, appropriately enough, the Korean conflict, the "forgotten war," with two films that may be largely forgotten today but that were fairly well-received in their day. Director Samuel Fuller's
The Steel Helmet
was made during the war, and its frank, realistic depictions of war at the squad level (Fuller had been a combat infantryman during World War Two, as reflected in his later, well-known
The Big Red One
) was, while not exactly subversive, not of the "flag-waver" variety, either. That is why for its follow-up,
Fixed Bayonets!
, the military insisted on a technical advisor, and
Bayonets
is a little more conventional than
Steel Helmet
.
"Do your job and do it right/Life's a ballTV tonight" - Frank Zappa

Director Robert Altman wanted very much to set the film in Vietnam. However, the 'suits' at Fox made him put a title card in the beginning to set it in Korea. But that's the only mention of it. Everything else really says Vietnam.

You have to really look at the zeitgeist of the time. How many movies can you think of that dealt with the Vietnam War that were made
during
the Vietnam War? Because it was such a controversial and highly sensitive war, unlike WWII, the topic just wasn't really touched by Hollywood at the time. Setting it during the Korean War made it easier to get the film made, even though for all intents and purposes, the film really does reflect Vietnam much more than Korea.

But that by itself didn't prohibit the filmmakers from changing the setting to Vietnam. Filmmakers have taken much greater liberties with the source material.
.

Because it was based on the novel by Richard Hooker who had served in a MASH in Korea.