Washington, DC? New York? Tokyo? Beijing? Moscow?
Certainly not Rome of today; even much less so Vatican City (which is not part of classical Rome).
You are correct. It must be interpreted correctly.
However, one of the possibilities — and the best one because of the 7 hills explanation — remains Rome.
I, however, don’t think that any actively proclaiming believers in Jesus Christ will be the Mystery Babylon religious system based in that city that has 7 hills.
It will be a mock-up of the Bride of Christ that will go along with the False Messiah and His False God and their False Herald. (Satan, Beast, False Prophet)
Does that mean that Rome the literal city is meant today? I don’t know. It is possible (and IMO likely) that it means a similar all encompassing pagan empire that will rise in the last days.