Miriam,
Thanks again for the thoughtful response! I think we've just about talked this one to death (sorry!), but I do have one more question. Per your comment:
"Once you've got pages you're proud of, I don't think you'll have any qualms about giving them their own tab in the main menu. Putting them anyplace else (like in an unexpected place like the about tab) is going to risk that they're not being found, which would then negatively impact the conversions they might otherwise generate."
Are you suggesting that the only detrimental effect would be people not finding the local landing pages by browsing our site via the main navigation? The only reason we were planning to publish the local landing pages was for organic search traffic – not for people who arrived to the site via some other path (a blog? a service-specific landing page?) who happen to be noodling around in our menus. We have already designed an experience that we think best suits our users and feel that adding location pages to the main navigation would actually NOT serve them well, even if those pages are of an incredibly high quality. For our area, a single "Service Area" page with a brief outline of the area the company services is much simpler for the user, easier to understand, and cleaner.
I guess this is what I'm getting at: If adding local landing pages somewhere other than the main navigation is only detrimental in terms of people not finding the location pages in the menus, that's not a huge concern. HOWEVER, if putting them somewhere other than the main navigation is somehow detrimental for organic search traffic, that would be a concern.
I'm also not really seeing how something like "About > Service Areas > [name of city]" is unexpected or confusing to the user. I mean... I'm not hitting the streets doing user research or anything (the only way to really be sure what users want!), but this sort of content hierarchy actually seems super intuitive and natural to me. Is there any reason to think search engines would not like us if I organized local landing pages this way? Would they not want to display my local landing page to a searcher with a relevant query due to the overall organization/placement of the pages within the site architecture?