I started replying but then I realized that it was all just jokes-but-serious that were outing me as a closet-anarchist, without my policy actually doing any good. I think this means you win, Obfuscant. Touche.
(For the amusement of the historians, I'll include my draft post below...)
Someone flying below 1000' AGL with a good camera can take a lot of incriminating pictures of your daughter by your swimming pool, especially if her boyfriend (or girlfriend) is there too.
Then my daughter and her girlfriend should stop murdering people at the pool ("Young lady, if I have to clean up all your messes, you'll never learn anything! You dispose of this drowning victim yourself! Oh, and you're grounded."), and do something less incriminating, such as having hott lesbian sexx. My daughter would know that the Cuban Missile Crisis happened over half a century ago so if a U2 could spot a silo at 70k then the horny 15-year-old next door can easily spot her at 1k with Wal-Mart grade equipment. It would never occur to my daughter that laws, rather than her discretion/countermeasures, would ever have a significant effect on her privacy.
(That's also why she'll encrypt her love-letter emails, too: because she knows that if she doesn't, they're possibly public just like her outdoor sex acts.)
I'm serious, but I also realize I'm totally dodging the issue and you deserve a better reply than that. Fortunately, you almost supplied the answer:
Does the FAA need to keep track of every local law...?
No, but turn that around, and I think you have the answer. If locals want to ignore the reality of both the FAA regs and their personal experiences that aircraft sometimes fly lower, then they're not really trying to do their jobs responsibly. If a government acts in bad faith like that, then yes, there will (and should) be conflicts. Obviously I don't really want pilots always worrying that they're going to be arrested every time they land, but everyone is always playing that game every day whenever they cross any jurisdictional boundary. If you didn't want to see a Taliban courtrooom then you shouldn't have flown to Afghanistan. (Or Los Angeles. Whatever.)
Hmm... let's pretend a local government has a safety agenda, rather than a faux (and futile) privacy agenda. They're not so much scared of voyeurs watching our hot nubian daughters having sex by the pool, but rather, they're scared of our daughters being shredded by the powerful cheaply-proliferating propellers, due to the pilot masturbating when they're supposed to be maintaining altitude or paying attention to the remaining LiPo voltage. This is a believable agenda, because one thing we are really good at, is getting scared. And probably even for good reason, since "drone" pilots tend to....
(At this point I realized that Shit Happens and our daughters are, in fact, going to be shredded if I run things, because I have so little faith in the laws (whether federal or local) really having an effect on what copter-operators end up doing. So don't vote for me. My opponent won't really keep you any safer, but at least he'll try to. His heart in the right place and mine's not. ;-)