I've heard nothing but glowing reports about Innova service. Not necessarily for the sit down, but I wouldn't expect anything different from the same company for a different machine.
As far as how important it is to have a local dealer depends a lot on you. I feel comfortable with machines, and with phone/e-mail support to do just about anything - so the local dealer was not as big of an issue to me as getting the machine I really wanted. If you are not that comfortable with perhaps making minor repairs with phone/e-mail support then perhaps you should consider the local dealer option.
HQ Sweet 16 and Baby Lock Tiara are the SAME machine. HQ makes them all, Baby Lock re-badges and sells it under their name. For this reason I've found that *most* of the time you can get a better price on an HQ.
I'm going to throw another monkey-wrench into the works ... there are other sit down machines out there as well. Not sure if you've explored these. Seems in the last few years all the manufacturers are getting into the sit-down market.
APQS has a machine called "George" ... one of the wonderful things about APQS is the lifetime warranty.
http://www.apqs.com/machines/george/
Nolting has the "Quilting Bee"
http://www.apqs.com/machines/george/
And Pennywinkle Ranch has a sitdown called the Sunshine 16. Pennywinkle is a smallish Mom-and-Pop company.
http://www.sunshine16.com/Freestanding.html