First a couple of nits. You don't "own" the airspace 30' above your ground. In fact the FAA claims jurisdiction over all airspace, from the top of your grass to the beginning of space. There are Supreme Court rulings that suggest you have reasonable rights to the airspace above your property, primarily for the purpose of constructing buildings or other structures, but the FAA still claims they can regulate that space. That is why it is currently illegal for any commercial operation to even hover a 1" quadcopter 1" off the ground even on their own property! 700' is also arbitrary and it depends on what class of airspace you are talking about. In general 400' is considered one of the practical limits since the FAA has long requested that hobbyists restrict their flights to below 400' and future rules are expected to include a similar ceiling for line of sight operations. 
As to your main proposal, it makes sense to give local communities a say in what they consider to be accessible to unmanned air vehicles (UAVs - the correct term for this vehicle, not 'drone'). But I would say, why limit it to just UAVs? Why not apply the same restrictions to private and commercial aircraft? Why should you restrict the ability of a UAV to fly over a stadium, but not a private aircraft? Finally, your perspective is entirely ground focused. While cities should have some say in where UAVs can and can't fly, this needs to be coordinated with the FAA's legitimate responsibility to regulate the safety of the national airspace. My mains concern would be the potential complexity of conflicting regulations that may result. Imagine the poor UAV operator trying to figure out just where and when the federal or local government will allow their flights? Perhaps, if there was indeed a standard way (and there is no one standard, but many standards) to specify both a 3D airspace and time restriction, and that was made digitally available to individuals who wished to fly, then I could accept this. There are software technologies to keep a UAV from leaving or entering a particular area. DJI, a popular UAV manufacturer, has programmed its autopilots to avoid all airports, for example. It would be an easy addition to include additional areas to be restricted as well. 

Humanitarian Space: Zoning and Urban Land Use Planning for Drones http://buff.ly/1AFryfm

What an exciting time to be an urban planner!

A quick proposal on "how" to zone for UAVs/Drones in cities and neighborhoods

Zoning and Urban Land Use Planning for Drones
Just prior to my last stint of working in Somalia, I purchased a small consumer drone to use as social research tool.  Unfortunately the landscape had changed drastically since my last time in Mogadishu, and it was impossible to use, in particular because I...

Dear Mitchell,
I always enjoy reading your blogs due to the innovation of your ideas.

I have always imagined that post-conflict environments like Somalia and any other recovering country for that matter would benefit a lot from using drones as a tool for planning.
You know the Somali landscape better than me since I have not been back to my birth country since the civil war, but I believe using drones could help a country like Somalia to gather the needed information and data to rebuild the country, otherwise it might be forever impossible to regulate any policy in the country since Somalia comes from a tradition of failure due to the lack of access to data. 

I truly hope that you'll locate your missing drone so that you can continue where you left. To inspire you, I will share with you the endless possibilities that Somalia can offer not only the Somali people but also our global world. Please enjoy the video below filmed by a drone in Somalia (probably by Chinese contractors): 
Your Beautiful Country Somalia (New Video)

Mahadsanid!

Talk soon :)

Thank you for advancing this useful and inevitable debate. To add to it, two thoughts. First, I think we need three categories of pilots: beginners (unlicensed, open fields only), proficient (licensed, access to sparely attended urban areas) and expert (licensed, for public events, such as sports events (and with permission)). Second, to address the ease and temptation of flying outside permitted zones, I can foresee a requirement to log flights in urban areas. Many drones already use wifi to bring the drone camera view to a smart phone; it's only one short step from there to logging the flight coordinates onto an online flight log. All that would be required is a piece of software, no new kit.

What if we zoned Chicago for drones?