This scheme is highly complementary to the idea of smart grids (or "electranets" as Gore puts it).  Right now the grid is so heavily interconnected that it is very hard to change just part of it, and it's too damn big to change all of it at once.  Breaking out pieces of it as microgrids, however, have many advantages:
Better opportunities for cogeneration, with less regulatory red tape.
Better opportunities to use locally available resources, and tailor supply to local demand
Better security and stability, versus both sabotage or accidents.
The ability to implement innovative measures, like demand response systems, on a small scale.  This makes the task manageable, and it also confines the damage that can be done by the inevitable mistakes that will be made along with way.

Yeah, I'd say a high tizzy factor is definitely warranted.

5. Hacking. Once you put this kind of control in the hands of thousands of individuals, some of them are going to come up with widgets, solutions, kludges, and jerry-rigs that we can't possibly anticipate in advance.

grist.org

One book that has powerfully shaped the thinking on this question is Lovins et al.'s "Small is Profitable," a spendy fat book that's hard to find but worth it.

And I found a new one at the library the other day, so I can't vouch for it except to note that Lovins has a positive blurb on the back cover:  It's called "The Grid: a journey through the heart of our electrified world" by Phillip F. Schewe.  Skimming it, it looks like one of the many books in the great new genre where a writer will look at how a common material (salt, coffee, ...) or tool (tv, computers, the telegraph) creates a huge wave of social change.  I'm really looking forward to it.

"An optimist is someone who thinks this is the best of all possible worlds. A pessimist is someone who is afraid that the optimist is right."