Optimizing website/adwords per city?

[GettingBetterAtIt]

I have a niche that I would like to optimize for city based searches like "used cars new york" or "used cars chicago" is there a way in adwords to detect if a city name is appended to the search and render the appropriate ad? Then pass the city name to my site as a variable?

Secondly is there a WP plugin that will take the passed variable and tweak the text of a post with the city name?

From there would adsense display the appropriate local ads for used cars?

[webworm]

You should submit your site on the google new local country sites marketing strategity.Google is now planning the sites to be locally famous.