Then I discovered that half the people I'm "connected" to in my area are links through "Los Angeles", which means, for all intents and purposes, once I hit that link, anything beyond is just a random stranger. Sort of defeats the purpose, IMHO.

Try tribe.net for a better designed if lesser populated solution to the problem. (They've only been online for something like two months vs. a year for Friendster.) The tribe.net solution would be to have a "Los Angeles" tribe to which you could join yourself, but which wouldn't appear explicitly as a node in the friend graph.

Friendster, such as it is, still has some value, but it doesn't get really interesting until your friends start discovering you. My sister and a New York friend of mine separately "invited" me to join Friendster. Okay, sure, whatever. After I was there, several other friends "found" me there and added me in. Clicking on them, I was able to find one or two common friends and add them to my own list. And, so it went.

Friendster is a toy. tribe.net has the potential to be a fair bit more than just a toy. (A friend of mine is one of the founders of tribe.net, so I probably can't repeat all the grandiose plans he told me.)