The customer may want to pickup a particular product from one of my many locations across the globe so they don't have to incur shipping charges.
I do this most of the time as well. I rather drive and pickup than to pay for shipping cost.
So if there were an option for Customer Pickup that would not charge shipping this would solve the free shipping issue.
Keep in mind I still want to enable shipping for products but need togive the customer the option for no shipping (No Shipping/Will Call).