The State of Franklin
The short-lived State of Franklin was formed in 1784 by eight counties in what is now the northeast corner of the state of Tennessee.
Franklin collapsed in 1789 and reverted back to part of North Carolina. Then, of course, those counties became part of the new state of Tennessee in 1796.
Franklin became a place of interest when we discovered that John's daughter Hanna, born in 1787, said on the 1850 census she was born in Tennessee. Assuming we have the correct Hanna and the correct information was recorded on the census, this indicates John Allen and his family were probably either travelling through or living in that northeast corner of TN prior to moving up to Fayette Co., KY.
Daniel Boone's 1775 Wilderness Trail from Virginia to KY dipped down into TN at what is now Kingsport, in Sullivan Co., TN. Boone's earlier 1769 trail from his home at the Yadkin River in North Carolina went through northeast TN to KY roughly following the Watauga River. It is generally known as Boone's Trail. Either of these trails might explain why John Allen and his wife had a daughter born there in 1787.
Other places on the above map; Choate's Ford is now Bluff City, TN. Sapling Grove is now Bristol, TN. Carter's place on the Watauga River was in the heart of the Watauga Settlement.
John Allen might have been one of the Watauga Settlement settlers who had arrived there in 1772. This group came down the Great Wagon Road through Virginia and settled there thinking they were still in Virginia. They soon found themselves at odds with both states and set up their own government known as the Watauga Association.
Historians say the Watauga Association also included some North Carolina "Regulators", dissidents displeased with colonial government in the Carolinas.
It is conceivable that during the Revolutionary War John was one of the Overmountain Men from Tennessee; the frontier militia that crossed the Appalachian Mountains and defeated an army of British loyalists at the Battle of Kings Mountain in September 1780.
Ramsey's Annals of Tennessee to the End of the Eighteenth Century, published in 1853, makes several references to an early Allen, including a John Allen. However, all of the following Allen references pertain to central TN not northeast TN.
Page 105 mentions that in 1771 a group of men descended the Lower Cumberland River in the vicinity of today's Nashville. A Christopher Stoph and William Allen were taken prisoner by the Indians.
Page 464 says "During the summer  , the Indians came to Drake’s Creek, where William Montgomery lived, shot down and scalped his son, and wounded John Allen." This location also seems to have been near Nashville.
Page 743 mentions Allen's cabins during a discussion about founding Montgomery and Robertson Counties , which would also be near Nashville.
It does seem unlikely anyone would relocate from this central area of Tennessee back northeast to Fayette Co., KY.
Of course, all of this Tennessee conjecture is based on Hannah (Allen) Downs 1850 census record in Cumberland County, Illinois. While many Ft. Boonesborough settlers came with Daniel Boone from North Carolina, it should be noted nearly all of the settlers who lived in early Clark and Montgomery County were from Virginia. If John was from North Carolina (by way of Tennessee), he would have been an exception.