What script for Community News & Opinion Site (and more)?

Here's what I'm trying to accomplish, and I need ideas for scripts to use for it.

I live in a community of 50,000 to 400,000, depending upon how far out you travel from the city of 50,000. We've got a crappy newspaper that tries to do everything from internation, national to local news. Problem with this model is that everyone already gets everything but local from the internet.. But the people in this community love to interact, write Letters to the Editor, talk about their town etc. There is no real community forum or online news site of any value.

I was thinking about starting something (got the killer domain name already) that was a local-only democratically driven online news source. It would be written by any local who wanted to write, with full discussion for every article.

I know that people in this community would step up to write articles and commentary for free. I'd envision each article being tagged into it's appropriate section (sports, shopping, restaurants, building, homes, etc), and each writer being rated by readers. The good writers would rise to the top and the crappy one would disappear to the bottom.

The system would have to have the facility for running banner ads or user-entered text ads. Adsense would not work since it doesn't serve up many local ads. Real locally sold ads would be more profitable anyway.

I know that Wordpress has the MU system, but it just feels too blog-like, and I don't really trust the system yet. A discussion forum would not display the articles like a community news source, although perhaps some systems like Invision would allow enough configuration to get something good going.

But is there somehthing that would work almost out of the box (I can confugre and add plugins; just don't want to hack) for what I'm looking for? Some type of software I'm not thinking of? I want it pretty open so there are not big hurdles for someone to post an article, but I'd still want them to "apply" so I can keep the crazies and spammers out of it.

In the end, I envision a group of pretty good writers who specialize in the field they've chosen to write about, anxiously being read and commented to by people in the community, many they might already know. I aosl see an active letters to the editor section, and an active forum and classified ads system.

A local news source written by locals for locals.

Can anyone point me in a direction that might get me goin with what I need? Price of software is not a problem.