I haven't used it myself yet but TradeHill introduced an AUD exchange a while ago:

http://bitcoincharts.com/markets/thAUD.html

BitPiggy isn't an exchange in the usual sense but another option for buying and selling small amounts, the rates aren't that keen but it's very convenient for smaller transactions. I think a few other exchanges like MtGox now handle transactions to AU accounts, even though the trading is in $US. But I think it's going to be natural for most people to think that if 1 BTC is worth a certain $US amount it's going to be worth the equivalent $AUD based on banking exchange rates so it's probably not much different at the end of the day.

Personally I think as long as there's 3 or 4 ways to conveniently trade with an Australian account that's plenty and covers any temporary problems that exchanges will have from time to time. After I first joined Bitcoin I don't think there were any especially convenient ways at all, which probably turned out to be a good thing otherwise I might have ended up selling a few for a dollar .

I am really unsure these days about the bitcoin, while the currency it's self is perfect and implemented brilliantly, Its the 3rd party services which is needed for bitcoin to even be useful is what worries me the most, with thefts and scammer web sites popping up all over the place is really does damage the bitcoin as a means of usefulness. I would love to use an australian exchange but I have stopped trusting and if or when I get my current bitcoins back it will be quick sell off and out. Its a shame because of hand full of scammers want to hack sites like Mt Gox and couldn't be bothered administrators like mybitcoin owner, Who I feel needs to be monitoring a site as big as his atleast once a day. Anyway my point is while the idea of an aussie exchange sounds great there has been too much issues with Mt Gox to be able to feel it would be safe to trade there, And yes I know we have alot more talented coders in Australia which could prevent these types of things from happing, but it still feels unsafe. 

I'd say we definitely need an exchange here, or at least an easy way of converting BTC to AUD.   The current methods are either a pain in the arse, or a rip off, or both.   An Aussie Exchange would be fantastic.

At this point in time - No.

YES with a capital Y !

3) $0.25c per transaction

I have contacted the foundation about this but they had no structured ideas to get the ball moving

No worries. I've been on a quest to find the best prices and un/fortunately it is provided but on two different sites.

Spread the word so people don't get bent over on the buy or selling end

That's awesome!

If you want to run an exchange in Australia you can't use banks, they will drop you like they did every previous exchange because of licenses and fraud. Instead I would recommend you approach existing gold/silver businesses, and currency exchange storefronts in Aus/NZ and get them to take cash payments for a small fee from the public and then end of day they send that internally to your westpac or other Australian bank account.

To pay out do the reverse, send the funds back to the store and they pay out in cash. They are already licensed to transmit money and have ID policies in place. This also avoid MITM cash deposit and bank wire fraud since your store guy(s) can provide the customer with a form clearly stating this isn't for an auction and they are funding a bitcoin trading account. When you start ballin' from all the trading fees, you can then afford to float these stores a daily maximum so you can do instant deposit and instant withdraw instead of waiting 24hrs.

To get international payments either these currency FX stores can figure out something or sign up to an intl payments FX transfer service, or do what Bitstamp did by partnering with existing exchanges like http://www.ecurrencyzone.net/buy.php who then take cash payments and forward them B2B.

If I ran an exchange I would never let any individuals touch the accounts with their fraud filled online bank transfers or MITM scams I would only work with established and fully licensed storefronts to take easy cash payments and handle payouts. Now you don't need a license or anything except a website that siphons trading fees since you contracted out all the fiat handling. Run your exchange out of Iceland too, with all your private wallet keys held offline. Don't use Australian TLD's or hosting services that are at easy reach for some idiot government authority to fuck with you.