Sampling frequency lower than half of sampled signal frequency?
The channel frequency controls the local oscillator on your SDR which is the frequency about which it covers.  So you are receiving signals from 16KHz below 107.5MHz to 16KHz above. 

The concept you want to look up is called heterodyning.  When you modulate (multiply) a signal by a sine wave you end up with two copies shifted in frequency space by the frequency of the sine wave.  So in your case, you've told the local oscillator to run at 107.5MHz which shifts the 107.5MHz carrier from the radio tower to 0Hz and to 215MHz though the high frequency version gets cut off by the low pass filter in your radio.

If you are interested in the math then if we want to shift a complex signal $X(t)$ by a frequency of $f$ we multiply by $e^{2\pi f i t}$.  $i\sin(2\pi f t) = e^{2\pi f i t } - e^{-2\pi f i t}$ where $i = \sqrt{-1}$.  So multiplying by $i\sin(2\pi f t)$ gives $X(t)i\sin(2\pi f t) = e^{2\pi f i t}X(t) - e^{-2\pi f i t}X(t)$ which is where the two copies come from.  (The multiplication by $i$ in, e.g., $i\sin(2\pi f t)$ ultimately just adds a $90^\circ$ phase shift.)