you will have to add this as a new form to the cart page, with its own submit button. Then add the eCart Set Session Variable behavior.
For the shipping rules, you will have to set the triggers to be based on the session variable value.
Add if statements around the local checkout code on the confirm page so it will only be processed if the Pickup from store option was selected.
a developer should be able to accomplish this fairly easily;y, if they have specific questions, they can post them here and I will offer guidance.