This seems like a no-brainer to me. You want to work in the area that your school is in. Your grades rock at a school has some "very good local recognition", which, by extension, means that it places well in your local area... the area you want to work in.
Call me crazy (you wouldn't be the first), but I wouldn't budge. No way. Law review + top 8% + networking in the area you want to practice in = stay where you are.
Sorry, but I respectfully disagree. I don't care how much prestige your school has in your particular area- UCLA has more. There may be a couple of places that put some credence into your performing well at a school down the street, but not many, and if the school you're going to is in a relatively small area (like a traditional college town) and you want to practice there, chances are they'll be more impressed that someone is leaving LA to set up shop there. Plus, in this economy and going forward, prestige is going to count for even more than it used to, and you may not to practice in Podunk forever.
Add in the fact that UCLA was your dream school (why, I'm not sure. The dreadful football? The disappointing Final Four appearances? The mascot that everyone has to google to figure out what they are? I kid, I kid), and the choice should be easy. Go where you want to be. Plus, there's a good chance that if you were top 8% where you are now, you'll finish UCLA somewhere pretty high in your class as well.