Hey Bill,
I actually have direct and very relevant experience with designing a URL architecture to penetrate local search in both Google's 10 -pack as well as full organic listings.
A while back I was designing a site for a client in the medical services industry and needed to target a large variety of cities across the U.S. (500+) and conducted a number of experiements to find out which directory structure would have the greatest impact in ranking for the various geographies where he had satellite offices.
What we found was that creating a master 'locations' page, i.e. .com/locations that then drilled into a deeper geography structure by state, .com/locations/pa ans then finally ending up at the city .com/locations/pa/philadelphia
Ultimately we found that the term 'locations' was able to signal local search results and more so allow for immediate relevancy to be established at the individual city level which made it easier to build authority directly at the individual geography.
I would be happy to provide you with examples of how this strategy is still driving #1 positions for head keyword term + city in over 300 locations, if you're interested shoot me a message.
Best of Luck.