The suggested method was really no more than a glorified localbitcoin process of meet and exchange funds, and hope the wire after the fact is legit?

There are professional bitcoin services that can offer this already, there are professional escrow services to protect both buyer and seller, including those offered by HSBC (mentioned in the steps to handle this).

Of course anyone with 500 BTC today has already eluded the scammers so far, I assume they won't fall victim to something.