What am I missing?
The profit comes at a cost known as risk.
Will the feds eventually bust down my door for being a money changing business without a license?
The Feds (probably FinCEN) might come after you for failing to file a SAR, they might come after you for Failure to register as a MSB, and if you aren't careful, they might try to collar you for Money Laundering.
Many states also have regulations requiring you to get a license from the state as either a money service business or possibly a money transmitter. You'll have to check with your own state to determine if that would be necessary.
Will my bank eventually notice that I'm selling bitcoins and suspend my bank account?
They might, but even if they don't, they might notice an unusual amount of cash deposits as well as the fact that the cash deposits are coming from all over the country. An internal investigation may lead them to believe that your activities are considered "high risk". Even if they don't realize that you are engaged in bitcoin business, they might decide that whatever you are doing is more risky than their risk assessment team is willing to accept. As such, they may cancel all your accounts with them and it may be difficult to convince other banks to consider you.
Will the IRS notice what I'm doing and charge me with tax evasion if I don't report my profits at year's end?
Easy way to solve that problem. Report your profits and pay your taxes.
Will I eventually get scammed somehow from a buyer, thus slashing my profits?
If you're careful, and you make sure you know what you're doing, scams shouldn't be a problem. However, it certainly is a possibility. Another possibility is that localbitcoins could shut down and run off with all the bitcoins you've stored at their site (or be hacked and have all your bitcoins stolen from them). It's been known to happen in the past with other well known and well respected sites.
Will something else unforeseen happen to dissolve all profits?
There are several other risks, but probably one of the more significant that you haven't mentioned yet is the possibility that you buy bitcoins from Coinbase, and before you get a chance to sell them, the market crashes resulting in selling the bitcoins for less than you paid for them.