I can only tell you that I've used Best Offer for many years with great success, but I very rarely use it on anything of lower value (say under about $50 US) unless I really didn't care about the final price.
I've found it's only effective with more expensive items ($100+) where there is enough "wiggle room" for both parties to find a comfortable compromise. Otherwise you can expect a host of fishing expeditions, fire-sale style, as you've discovered. These are buyers who are just hoping that "Best Offer" on lower-priced items signals seller desperation -- especially if the whole store looks like that -- and that they might get lucky. There's no reason to be insulted or offended, it's a well-known phenomenon.
Others may disagree, but I've seen problems reported with auto-accept/auto-decline. I personally avoid those options. For example, buyers will take a stab at their 3 allowable offers to try to reach the lowest possible price, which you are then obliged to honour. Or buyers make offers that stipulate free shipping where shipping is already stated in the listing (not allowed, but buyers will try and eBay won't intervene). Then you have to decide whether to provide free shipping or lose the potential sale entirely.
I'm not sure I understand how the disadvantages of using Best Offer on lower value items helps with local pick-ups during a CP disruption. Do you mean you're counting on buyers being forced to correspond with you before purchasing so that you can suggest cash on pick-up if they're local? Buyers making a Best Offer won't automatically be prompted by eBay to advise you of their shipping option selection. Few will even think of asking when they make an offer. Using Best Offer for that purpose seems to me like adding another potentially awkward and money-losing complication to an already troublesome situation.
Incidentally, are you aware that eBay doesn't provide for any communication by the seller in accepting a Best Offer (unless you're counter-offering)? It's either accept or decline, no message permitted. That has always seemed strange to me, because sometimes I want to immediately thank a buyer for their offer, but that's how eBay has decided to deal with it. The Best Offer "message" box, when available (for counter-offers) is very skimpy -- about 150 characters if I recall.
You will, however, see the buyer's general location (city/province(state), but not actual address) once they make an offer, which presumably would allow you to message them directly about possible local pick-up. The problem is that any communication before an offer is accepted might be ill-advised.
Why not continue to show "local pickup available" on your listings then message buyers directly to discuss possible local pick-up once they've chosen to purchase an item? You will have their complete address at that point and you can always suggest cancelling if the arrangement doesn't work. Surely this would be easier than showing all your listings with "Best Offer", which to my mind has the effect of advertising a "going out of business" sale.
I'd be more than happy to help with any advice if you do want to use Best Offer on select items. Since I've used it for years, I've pretty much run into every wrinkle and permutation possible. My view is that it does work extremely well if used in specific situations.
