Hello Mick,
What you are describing here sounds like an on-page Silo to me. It will not generate any negative feedback from Google if you do it correctly. We actually recently instituted this strategy with a windows and doors company in the UK (windows & doors London, windows & doors Suffolk, windows & doors Ipswich, etc.) and have had tremendous results. Combined with a solid link-building campaign, they shot up the rankings to be #1 and have held it for over a year now. We have not seen any negative attention or penalties.
The upshot is that this tactic, if properly implemented, will generate significant ranking boosts alongside a decent link-building approach. You will do quite well if you are going after geo-specific keywords and you build your site architecture around them. I cannot vouch for individual pages put together piecemeal, however. The structure we put in place took about 2 months and was well-researched beforehand.
If you want, feel free to reach out and I would be happy to send along more advice regarding our process.
Hope this helps and best of luck with moving forward!
Rob