Hi Eljaybe,
Glad to see I'm not the only one with a question like this. I got my question answered the hard way - trial and error. I'll try to explain what happenned to me and how I "fixed" it. I went ahead and set-up a National campaign on Yahoo! PPC. Some of my Ads were not allowed due to using "Regional Terms", either as part of keywords, as Titles or even in the descriptions. But, then again, some WERE accepted! So, I became confused, to say the least. I e-mailed Yahoo! and within 24hrs. got a reply by phone. A nice guy there said "No, you don't need to have the "regional terms" in your keywords, just in title and/or description". So, I went and re-submitted new keywords without regional terms and Ad copy (titles and/or descriptions) WITH regional keywords, as he suggested. He also recommended a Local campaign to "compliment" my National campaign, which is what I figured to do in the 1st place. Well, needless to say, after doing what he suggested, 12 of my 13 keywords/ads were denied after editorial review! So, off went another e-mail and another phone call came within 24 hrs. from a nice lady @ Yahoo! She put it clear and simple: If you run a local campaign (since our business serves local only), the local campaign keywords/ads will run on main search page as well, NOT just after the searcher goes to Local search. In other words, the Local campaign ads show up for both. You do NOT need a National campaign and you do NOT use regional terms either, as the region the ads will show up in will be only that distance you chose when setting up the local campaign (in our case, I chose 30 mile radius). It's working fine that way now. Of course you'll have less impressions/clicks than a National campaign, but they're targetd to your service area.
So, the answer is: set up a local campaign with your service area defined in set-up (e.g., 30 miles, etc...). Use NON-REGIONALIZED keywords and title and descriptions. Unfortunately, the budget for keywords goes by a "National" average, so I bid that amount. But, the budget will last a lot longer before needing to replensh it. I also only did a couple of keywords/ads for the main keywords at 1st, not all of them, to see how it would work. Now that it's working well, I am ready to go in and add keywords/ads for rest of my Local campaign.
Hope this helps you out. And, although I received wrong information from yahoo! the 1st time around, they WERE very responsive to e-mails, so you can e-mail them knowing they'll get back to you. Also, the lady on 2nd request for help, not only closed the National campaign right then and there over the phone, she transferred all the $$ in budget over to the Local campaign, offered to set it up right then and there for me and even gave me a $20 sign-up promotion credit! So, be sure to ask for that too. Good luck, Mark M. :)