Hi Carl,
You are not alone in wondering about this phenomenon in which a local listing appears to make organic visibility disappear. We've had several questions come into Q&A about this recently. In fact, what is happening is that the organic listing has typically been absorbed into the local blended listing which contains both first party data (like, from the company's website) + 3rd party data from Google's local index and other sources.
If clients are concerned, it will be helpful to educate them about this and, also, to show them heatmap/eyetracking studies like this one that shows how local listings get the lion's share of eyes on them in the SERPs:
http://www.seomoz.org/blog/eyetracking-google-serps
Many such studies have reached similar conclusions. Because of this, a high local blended rank is generally to be prized.
In the past, it was common for dominant businesses to have both a local listings and an organic one on the same page of the SERPs. I saw this everywhere, all the time. Now, I am hard put to come up with a single example of the results being configured in this way. Now, pretty much all local results are blended results and the appropriate goal for most local businesses is to get a high blended local listing for their main search phrases.
Regarding deleting the local presence from Google's index, it's really important to realize that this can be really tough to do - some would say impossible. Remember, Google can create a local page for any business at any time from third party data, hence, all the unclaimed listings that have always existed in their local index because they were created from third party sources and not from the say-so of the business owner. So, unless the client were to remove every reference to his local business from his website and across the entire web, there is always the chance that Google will re-create a profile for the business without his permission.
Because of this factor, and because of the vast power Google now has over the local business scene, business owners have had to determine to learn to play the 'game' with Google as well as they can. In most cases, the highest goal being aimed for is a high-ranking blended listing, which it sounds like your client has achieved. So, typically, this would be a time for congratulations rather than concern.
Hope these thoughts are helpful to you!