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Dear Samba,
As far as state of eligibility is concerned, you can write anything among AP or TN. As stated earlier, the brochure states that such decisions need to be taken by the candidates themselves.
As far as eligibility for 85% state quota is concerned, you can apply for both the states for state quota seats in government medical/dental colleges, provided you fulfil their individual state eligibility rules. In this context, the official information states, "Such decisions need to be taken by the candidates themselves. However, it is clarified that such candidates can apply for counselling in both the states and during the counselling, his/her eligibility for the 85% Quota seats will be checked by the State Admitting Authorities and if found eligible, the candidate will be given admission." Hope it clears.
All the best!
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