Re: local bands; live or memorex?
A buddy of mine used to work at Guitar Center. He told me of a time he was once ordered to deliver an order of drums to the Hoobastank show that was in town that night. He claims when he was backstage, he discovered the entire show was a pre-recorded Pro Tools session fed directly to the venue's sound system, with everything else purely for show. That's the only time I've heard of such. I'm not sure whether I believe his story or not.
I personally have never done such, but the last band I played in did use backing tracks. There were some sound FX, synth and orchestral parts to the songs. But only those parts were on the backing tracks. Everything we had a live instrument for (drum, guit, bass, singer) was played live.
Running backing track offered another advantage beyond just having sound FX and an orchestra to back us. We put the drummer on a click track (pre-recorded metronome, whatever the term for it is). With the backing track and the click track panned hard left and hard right on a mini MP3 player, a simple 4 channel mixer and some basic in-ear monitors, we could send the backing track to the board for the sound guy to mix into the mains with everything else. Also the drummer could mix the click track back into his monitor feed from venue's system, and control the levels of each without having to wave to the sound guy between the songs to turn anything up or down.
Having a click track in in-ear monitors allowed our drummer to stay very tight, and thus the rest of the band. The most common compliment I can recall from audience peoples was how tight our timing was. My sense of rhythm and timing is mediocre at best (working on that), but it sure is a lot easier to stay in time when the drummer is locked in perfectly to click-track or metronome.
The main disadvantage of running such a setup was that we were locked into playing the songs exactly the same time every time without exception. Consistency is good, but we had to play the songs exactly as they were on the recordings that were to go on the album. There was no room for improvisation, or the whole song would fall apart.