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Well, this is a tough problem to solve without a "regions module" like my classified plugin has: http://awpcp.com/premium-modul.....rol-module.
Ideally, you want a set of N categories and 50 states. That's 50xN total categories if you try to make them all by hand (don't do that, I don't recommend it!). The regions module would allow you to have just N categories, but filter the results down to what is "local" to you by defining local as what the user wants to see (e.g. all ads in Houston, TX)
BD doesn't have that capability yet. I want to add it, but I'm not there just yet. Working on it, though.
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