>I was paying attention - and I had looked at this job posting myself, but didn't send an application/resume because of the 'Local candidates' statement. In my experience, it IS exclusive, or they wouldn't have made the statement. And since his resume has nothing recent that is not contracting on it, I'm guessing that Steve never stated specifically in his cover letter that he was looking for a full-time position.
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An application for a position should be viewed as a submittal based on the terms outlined in the job posting. The references of past jobs/contracts should not be construed as requesting the terms of the position be changed, merely that the applicant wishes to obtain a full-time job.
It is rather ignorant to consider the applicant is asking for different terms(contract/fulltime/misc) unless they specifically state such intentions.

I must agree with John that your posting was rather inconsiderate.

An employer should always treat any applicant with respect, even if they do not qualify. A simple acknowledgement of the resume and that the applicant did not meet the requirements for the position would be sufficient.

I normally don't get involved in these disputes but I had to say my piece.