The graduate level, long term internship historically leads to full time employment. I intend to look for work in a different location within the same field. When asked directly about my future career intentions how do i diplomatically field questions by upper management who I want to retain connections with?
Generally, the exact same way you'd respond if you weren't an intern and were just a regular employee seeking a job elsewhere. In other words, diplomatically and as far away from 'Here are all the reasons I'm not happy here' as possible.
You're not leaving because of reasons X, Y, and/or Z. You're leaving because you got a great opportunity with Alternative Inc, where you'll get to do A, B, and C - and you're really excited about it. You loved working with them at CurrentTech, but you feel the best move for your career development is with Alternative Inc, because you're going to get to learn L, M, and maybe N. Etc.
If you're asked these questions before 'Alternative Inc' is lined up? Then you're in the same boat as a regular employee that intends to quit but doesn't have another job yet: don't say anything at all. Worst case... imagine that the end of your internship rolls around... but you can't find any companies willing to hire you for what you want to do. You've already announced you don't want to stick around... but don't actually have a new job to go to.
If it helps, think of it this way: the higher-ups you're worried about care a heck of a lot less about this than you do. Keep in mind, you leaving at the end of an internship is far less of a hassle than a longer-term employee quitting. As long as you're respectful, professional, and courteous? Then they're not going to have anything against you.