Interesting idea, but is a "local currency" really necessary to get people to shop locally?
I think it's a community attitude. Where I live, city of 180K, county of 300K, there is a very strong "shop local" ethic. We have many succesful locally owned businesses.

We have walmart too, lots of us choose to shop local for many differnt reasons. And sadly for some folks, saving a few bucks outweighs any political feelings they might have.