I suspect that most active BTC sellers on LocalBitcoins act as a passthrough to the exchanges. They sell above spot at a price that allows them to rebuy on the exchange to replenish what they sell for cash.
That does happens a lot, but there are plenty of other routes. Miners and early adopters (who probably mined in the past) maybe be looking to sell lots and lots of coins with minimal records being created, while preserving their anonymity and not dumping the coins on Gox which would have an adverse effect on price. I wouldn't be surprised if more than 50% of the USD/BTC exchanging was done OTC.
