Arcadia does pretty solid stuff, so my gut would say if they see a market, there's a market.
Personally, I think it's a great idea, as local history in print form tends to be a local market (unless it's a really popular, major city). I would think e-books would give a better chance of discovery and sales in other markets because of the sampling factor and instant downloads.
For example, I would have probably gotten
http://www.amazon.com/Klondikes-Chip.../dp/0811728447 in e-book if I didn't know my mom would want to read it and she doesn't groove to the tech. But she's kind of an exception. I know plenty of older readers who devour e-books.
I think the more outlets for local history the better!
Two other things:
I would have been more inclined to e-book if it was available on NOOK, my preferred reader.
It may be tougher to produce a good history e-book if you are trying to reproduce older, black-and-white photos. I'm no technical expert, but that seems to be tougher than just dropping in spanking new digital images. Still, not impossible. Just extra work to ensure a quality product.