Google announced [googlenewsblog.blogspot.com] today that it has added the ability to search locally at Google News.
Having had a short play with this, it seems to have some problems (a search for my favourite Football/Soccer team yields good results in the non-local search but it's very poor when the same word is used in conjunction with the city that the team are based in). Having said that many local searches are very good, so it could just be hit and miss.
You can search by ZIP Code or Town/City (don't forget the State or Country indicator if you are not using a ZIP Code). Google claim to target the location by using the whole article, which does seems to work quite well, meaning you may see an article from a national or international source if it talks about the targeted area; nice.
On the down side, and it could be me missing something, it looks as though a bit of URL hacking is required to do a search for something particular in a place. e.g.
From a developers point of view, this would be a more interesting feature if the terms allowed the feeds to be used on commercial sites, but it looks as though only non-commercial sites can use these feeds.
How's the quality of results in your area?