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tedster - 3:37 am on Mar 5, 2009 (gmt 0)
Local search is what you're talking about here, and right now therer are many odd schemes going. People are leveraging everything from link networks to wild-card subdomains. If the content at the end of the tactic is truly useful and not boilerplated database auto-generated junk, that's one factor that should play into ranking decisions, to a degree at least. However, I'd bet that Google (and other local search engines too) will not reward this particular approach for very long. I think it's a short term exploitation of a current loophole rather than a long-term, solid business plan.
It's a ranking tactic, and the kind of thing that we saw (and Google stopped, for the most part) in some very competitive markets.