This is speculation on my part, but my thinking on the pronunciation is based on this entry at the Online Etymology Dictionary: http://www.etymonline.com/index.php?term=baloney
baloney: slang for "nonsense," 1922, Amer.Eng. (popularized 1930s by N.Y. Gov. Alfred E. Smith), from earlier sense of "idiot" (by 1915), perhaps influenced by blarney, but usually regarded as being from bologna sausage (1894), a type traditionally made from odds and ends.
balogna/baloney -> |bəˈloʊni|
blarney -> |ˈblɑrni|
It is imaginable that some NY regional dialects could either reduce the pronunciation of 'bologna' to the point of sounding like 'blarney', or conversely that 'blarney' is lengthened to sound more like 'bologna'. Since they both have definition senses of something stupid or nonsensical, and the Irish and Italian influences of NY, I could see how the dialect environment could have wreaked havoc on our poor baloney.