There is something to be said for local rivalry. It seems to bring out the best in teams. Look at the Greater Manchester area with teams like United, City, Blackburn, Bolton, Preston, Burnley (not forgetting the likes of Oldham, Rochdale and Bury) all within spitting distance of each other yet most have spent the majority of their existences within the higher echelons of the league. There is only only one Yorkshire team in the PL; in twenty years time there could be three - all from the Greater Hull area.
Hardly. Both North Ferriby & Hull United practically beg City fans to come watch them. A rivalry? I don't think so.
I don't see how a team in the area doing well is an 'unwanted' local rivalry? If NFU or Hull United got into the Football League it'd be great to be able to farm players out to them. If they ever got close to being competitive with us, they'd be a side we love to hate.