Hey There!
Good topic! First, let me point you to this cool little tool Local SEO Guide just published: http://www.localseoguide.com/the-local-keyword-generator-tool/ It should really help with your keyword organization needs that you've mentioned.
From your post, what I understand is that your business is at a very critical moment in planning its strategy. You are so right: it is really easy to go at this wrong and end up with a redundant, duplicative site that simply doesn't do a good job of serving users. Most local businesses will need to create a strategy something like this for their website:
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Build great basic pages (home, about, contact, testimonials, etc.)
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Build a great page for each service the company offers.
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Build a high quality, unique page for each city in which the business has a physical location. So, if you've got 5 physical locations, that's 5 pages.
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Then, consider how you wish to cover all of the other cities that you serve. If you serve hundreds of cities, chances are slim that you're going to be able to create amazing content for all of them in the short term. As you've mentioned, you know you're not gunning for local pack rankings for cities in which you lack a physical location, but providing some content about them can definitely help with your organic visibility. So, typically, in this scenario, you'd be considering something along the lines of identifying maybe 10-20 most important cities where you serve but lack a physical location for, and then consider how you can create content that really shines for your work in those cities. For example, an architect physically located in San Antonio, Texas may have designed 3 building in Dallas, Texas. Even though he is not located in Dallas, he could create a wonderful page about the buildings he helped create there. In other words, you can showcase your projects in a given city, including text, photos, testimonials, links to 3rd party reviews, topical tips for that city, etc.
If a business can take this approach to its more important service cities, and then earn a few good links to those pages, they are well on their way to competing for organic visibility. They can then move out from there, perhaps mentioning some of their secondary target cities in blog posts, social media, etc.
Here are some resources I think you'll find very helpful at this critical stage of your planning:
https://moz.com/blog/overcoming-your-fear-of-local-landing-pages
https://moz.com/blog/local-seo-checklist
https://moz.com/blog/build-content-keyword-map-for-seo-whiteboard-friday
https://moz.com/blog/long-tail-seo-target-low-volume-keywords-whiteboard-friday
https://moz.com/blog/google-may-analyze-evaluate-quality-content-whiteboard-friday
Hope you'll enjoy these!