It really depends, if you respond with "Google geo-locates your business services" , he may reply and say "my competitors a,b,c,d are ranking for "city keyword, why can't you deliver that".  My only advice is to optimize his Google Places listing to get him ranking for those local keywords.  There really is not a way to optimize for 50 cities and 80 zipcode without having duplicate content.  Also it seems that your client has taken a strategy role, he hired you to for search engine optimization and you should be delivering the strategy to him.  You make be able to back your case by showing traffic measures.

I would set up a splash page letting people know that the page is going to be redirected.  I believe if your receiving decent traffic to your site that the end user's experience is more important than the search engine value.  You could also set up a splash page that reads they will automatically be redirected within "set amount of seconds"