I'm of the opinion, and mind you, it's just MY opinion...that Hell IS a place, not only a state of being.
There are too many references of it being an actual location to dismiss it.
Same with paradise. "Today you will be with me in Paradise." Not, today you will enjoy the glory of God and bask in His everlasting love.
To be honest, I think a case could be made for either position.
On the one hand, there's something to be said for the idea of heaven/hell as states of being in the presence of God which depend on the receptivity or lack thereof of the individual person. It is proposed by some of the fathers, and has a Scriptural basis (e.g., Ps. 139.7-12). References to heaven/hell as places in Scripture may just as well be a divine condescension to the capacity of the human mind to understand the message: a place is an easy thing for most people to relate to, but it takes some "imagination" (for lack of a better word) to appreciate a state of being; references to a place in the writings of the fathers may simply depend on Scripture unquestioningly.
On the other hand, it's not unheard of for God to create places. He already created heaven, earth, "outer space", etc. And, in addition to the numerous references to heaven/hell as places, it is important to remember that, at the resurrection, our souls and bodies are reunited (if we have died by then) never to be separated again. While the resurrection body has certain characteristics our current bodies don't have (e.g., walking through closed doors), they clearly continue to do other things our bodies do even now (e.g., eat, walk, talk)...they must "occupy space" as bodies are wont to do. So if the body occupies space, it's reasonable to presume that it will need a space to occupy, and I agree that "the burning fire of God's love" seems insufficient as a physical location.
So again, I think you could argue it either way and still be faithful to Scripture, the interpretations of the Fathers, and other sources of our theology. Each "explanation", while different, is based on theological concepts which are unquestioned.