> What parameter is used to limit the radius of a local search?

That is a question for the local search group
http://groups.google.com/group/Google-AJAX-Search-API/
This one looks relevant
http://groups.google.com/group/google-ajax-search-api/browse_thread/thread/322664283412b49f/4ee8c802237d7ec6
and seems too say that you can't do that.

>  I have a local search POI's with GoogleMaps and returns results that
> are too far from center point, I would like to limit this, as should I?

You could test the distance of each of the returned results and not
display the ones you don't like

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