I agree entirely -- I've been telecommuting for ten years now, and this is easily the #1 reason the recruitment process fails with me (with small companies as well as large).
we love the fact that we can recruit folks from anywhere in the world and not disrupt their lives, since we are completely remote. it opens up a much wider talent pool and allows you to benefit from local economies as well, without actually being there.
Companies seem to forget (or not put much emphasis on) another aspect of having telecommuters: you don't get tunnel vision due to locality. I've worked for offices around the globe, and one thing that's always struck me about remote vs local is that remote can bring in a new way of thinking that you don't always get locally due to local cultural thought processes.
Nope, I mean recruiters contact me about positions but then find out that I cannot relocate and that ends the discussion because the company they are recruiting for disallows telecommuting for one reason or another.