Claus, I read the original thread on this patent 6 months ago, but your summary is great for those of us (like myself) who are not math experts.
One of the most important aspects of this patent is that is very important to have inbound links that are highly-related, provided they are from external sources.
For example, suppose you have a page about Blue Widgets. Now suppose you get a PR9 link from another page. That PR9 link will only get counted (for LocalRank purposes) for search queries in which it is returned, along with yours, in the top X initial results. So if the PR9 site is completely unrelated to your Blue Widgets page - that is, it does not get returned in the same intitial set for your key search queries - it won't get counted at all in calculating the LocalRank for that query. So it is very important that links are highly-related to your targeted search terms.
Some might describe this as one approach to "theming", in which links from pages on the same "theme" are given more weight than links from unrelated pages.