It's a very interesting strategy (comprehensive local site, relying heavily on user-generated content) and will be one to watch.
There are those who will be very skeptical that you can run a network of local sites almost entirely on user-generated content. But I think there are examples here and there that suggest it can be done. (Think how big a bet Yahoo! just placed on its 360 blog/community application.) In addition, InsiderPages and Judy's Book are gaining traction with users and showing that community can drive content and revenues (InsiderPages approaches only those local businesses already reviewed by the community).
I believe that Backfence has established a model for what local newspaper sites could and maybe should be: comprehensive local portals. But because of legacy and culture issues, it's probably unlikely that newspapers could have developed this model by themselves.
Let's see how they react to it.