Question: I purchased my Iphone 5 in New-York but i live in London, may Apple restrict me from replacing the Power/Sleep button outside of the US?

Answer: 
call apple, they tend to do it on a case by case basis for full phone replacements. 

That being said if it is just the sleep button, in countries like canada you can just walk into any apple store and they do it for you, maybe try walking into a store, i would be shocked if the recall was not available in canada and not london
When I was in California with a defective iPad purchased in London, the San Luis Obispo Apple store swapped it out for a replacement with no problem. It just had the standard warranty, not Applecare. But I seem to recall that they said they couldn't have done the same for an iPhone, because the UK and US models are actually different -- different frequencies. If you're just having the button replaced that shouldn't matter, though.