Thanks for the link, but this seems to confuse me:
Note that both parties can cancel the trade at any time. Each trade done with the transaction service will build your reputation on localbitcoins.com
Doesn't that mean that even if he releases the bitcoins, and receives the transaction-code he can still cancel the deal? Like on paypal?
I'm afraid I'm not certain, the transaction system differs slightly from the escrow system in that regard I believe.