Wallace said:
I've followed this up, it looks like this was a unfortunately timed paper, coming out just a month or two before the HST key project to measure H0. This paper uses a best guess for H0 of just over 50 km s^{-1} Mpc^{-1} substantially lower than the 72 km s^{-1} Mpc^{-1} found from the Hubble key project. This significantly changes the articles conclusions since it really shows that the local group Hubble diagram will not match the slope of the global expansion rate very well at all. I think this is closer to what I would have expected.
But they didn't measure the Hubble parameter; rather they took a value of 57 km/sMpc as
an input for their model. While it is reasonable to assume that the numbers would change
somewhat if a different input value were chosen, the main results should not be critically
dependent on this. That is, the linearity of the local Hubble law and the small local velocity
dispersion around it should still hold.
As Hellfire pointed out, the mystery of the quiet local Hubble flow could have an explanation in dark energy, suppressing the growth of velocity fluctuations. However, this explanation is not sufficient, since the parameter values necessary to achieve this would
be incompatible with other observational tests. For details, see
M. Axenides and L. Perivolaropoulos, Phys. Rev. D 65 127301 (2002) (astro-ph/0201524).
So what the observations of the velocity field of galaxies in the vicinity of the local group
is telling us, is that there is no obvious link between the expansion and the clumpiness of the Universe. Thus the fact that the Universe is even more inhomogenous on smaller
scales such as galaxies and planetary systems, is in itself not a sufficient argument
to conclude that the expansion cannot exist and be detectable on such scales.