Think about it from this prospective: In a retail shop, nearly all buyer/seller interaction is one on one. How is meeting in public place any different then meeting in some little, quite possibly secluded, retail shop?
I see your point, but I think the difference is that the people will know about her before setting up a meeting. Sure any loon can come in off the street and walk into a shop, but they're less likely to wander into every single Brick and mortar store until they find someone they want to rape and murder.
The likelihood of some crazy person finding you on the internet is greater. Say they find your myspace first and decide they want to meet you and do god knows what to you (myspace is full of complete perverts if you haven't noticed), and then your myspace leads to your store where you offer to meet up with locals to hand deliver their items. Well this is the perfect opportunity for said perverts.
Most online stores, including etsy allow you to give a profile and have forums etc. or they provide a way to find you other places on the internet. This way a person can find out all about you before coming after you. Though you may not have direct links to your myspace or whatever on your etsy shop, just by knowing a little bit about your wares and your etsy shop name, if you have any other web presence what-so-ever, I could find out everything about you.
Through the internet the person could find out all about you from the convenience of their own home. Having an internet presence really narrows down the search for a nut. And if they find that by buying something from you they can actually get you in person, well that's not good for you, but great for them.
Also meeting someone specifically regarding their item is much more personal then wandering into a store and talking to the proprietor. I would think that sociopaths who would hurt someone would really appreciate the intimacy of such a situation. It all ready gives them an in.
Outside of the axe-murderer scenario, I don't see the benefits of meeting some place in person to get an item.
1. Having to meet someone some where to get an item is more inconvenient then having the item delivered to their door. One of the reasons I do online shopping is so I don't have to drive all the way to the store.
2. Unless you are shipping extremely heavy or bulky items, the amount of money the customer is saving is really very minimal.
3. As patrick said, you could go through all the trouble of showing up with the product and the person can start asking for changes or say they don't like it. I'm not saying that your wares are in any need of changes, but when the customer has you right there all ready going out of your way for them I think there is a tendency for them to think, oh hey I can get this even more custom made or to nitpick things.
When you sell online it's more difficult for them to do this because the item is all ready shipped to them, they'd have to go through the trouble of shipping it back and then waiting for it to get to them again, etc.
When I've met people in person about my wares they're always asking for special things to be done to their item. Having you there makes them more likely to make demands. When they have it shipped to them it is what it is and they respect that more.
Well that's my 2 cents.