I've been playing with Outside.in for a few minutes (here is the Portland feed), and my first thought was that this is exactly what friends told me to do in 2000. MetaFilter was just taking off being barely a year old, and San Francisco friends urged me to make city-specific local news hubs that interested people could find links and news for and post to. Tom Coates had a great write up in fall of 2000 asking for precisely this. I was (and still am) too busy to take on such an effort, but it's good to see someone trying to pick up the reins and try it.
I'm surprised they didn't use CityName.outside.in URLs instead of outside.in/City_Name though.