Custom report based on current user and list of locations

You seem to be asking two questions.

For this question here:

Now- we're struggling with how to lookup the options in the Region field to call up all the records for the employees in their region. 

If you just want to show a block of text which lists the employees in their Regions, then this can be done with a Formula Query. The result could be also done as a hyperlink to the employee records, but it would not be a normal embedded table on the Manager Record.  If you did want to have an embedded table, then there is a User Focus Technique which I could implement with you which would take about 1 hour of consulting time.  You would go to the Manager record and push a button to put that Manager "in Focus" and the screen would refresh with a typical embedded report of the employees in that Manger's Regions.

Then if I understand the second question, you seem to be saying that

 you have a Project which is in a Region and you want to assign managers to that Project, but only mangers who have that Project's Region in their Multi-select Regions field. 

That can also be accomplished though the User Focus method where the user would click a button to put the Project in Focus, and then the choices offered could be limited to just the Managers responsible for that Region. 

You can contact me at mark.shnier@gmail.com to work with you to set up that User Focus method.  I;m not sure if you have worked with Formula Queries before, but we can either work though that method slowly on this Forum here or else more quickly as a one-on-one Zoom call session.