While DBI remains favorably disposed toward the idea of individuals producing their own fuel , there are very real safety and legal obligations in making biodiesel. One of my realizations after making biodiesel for a while was that it just wasn't reasonable to expect that a family in a residential area could make themselves fuel self-sufficient. 
While some would assert that no amount of biodiesel can be safely made at home, I still believe the issue to be resolved is how much is too much? Some folks are going to do what they will, regardless of what anyone says, but for those who are trying to be good neighbors while they pursue their homebrew activities a couple things seem obvious:
1) Making a "Dr. Pepper" batch is a perfectly reasonable example of homebrew biodiesel, even in a residential setting.
2) Making hundreds of gallons per week for a "cul-de-sac biodiesel coop" is not. 
The question is: where on that continuum -- between a liter test batch and hundreds of gallons for friends and neighbors -- can a reasonable person say "this is (or should be) permitted" in a residentially zoned area. And I mean this activity is permitted in the sense of "non-interference" from the authorities, not sanctioned or licensed by them. The City of Gilbert has a forward-thinking approach on this issue, based on work done by the Arizona Emergency Response Commission.
Anyone who is currently contemplating "homebrewing" biodiesel would be well-advised to do some extensive investigation into the safety and legality of making fuel at their residence. A great starting place is Hans Huth's excellent "Biodiesel 101", which is an updated (and improved) version of a widely used homebrewer's guidebook, and has the additional benefit of Arizona-specific legal/tax information.
What may be an even better alternative is to join a biofuels cooperative, such as Dynamite Biofuels Co-op. This leverages the experience of persons who have been doing this for years, and neatly side-steps the idea of residential fuel production altogether.
 Brad put his thoughts into a dbi-workshop forum post which I think neatly captures our thinking:
"Re homebrewing, while I'm not a homebrewer myself, I personally remain favorably disposed to homebrewing, subject to a few serious caveats. I admire the do-it-yourself, self-sufficient culture that homebrewing embodies -- it seems somehow quintessentially American. I like too that homebrewing is a manifestation of an extremely decentralized model of fuel production -- I think the trend towards decentralization in fuel production is good for everyone except a few petrol fuel stakeholders. And homebrewers meet our "running code" test: they have been getting sustainable biodiesel into fuel tanks and on the road for years, with all of the attendant air quality and other benefits. The grassroots energy of homebrewers has significantly helped the adoption of biofuels. Plus there's an element of liberty: people should be free to pursue their homebrewing interests (and put non-ASTM tested fuel into their own personal vehicles) unless and until they create unwarranted risk for others."
 I use about 15-20 gallons of biodiesel a week. Add an additional vehicle (or three, in my case, if I count my two sons, who both wanted in on this deal :-) and let's say for round numbers 40 gals of biodiesel a week. That means processing 45-50 gals of oil per week, which uses over 10 gals of methanol and approx. 3 lbs. of catalyst. I would also have to dispose of at least 15 gals of glycerol/soap and, if water washing, more than 80 gals of high BOD wash water a week. Keeping enough methanol around to avoid running every week to get it, and enough catalyst for same, means we've probably moved beyond what could be considered reasonable in my home. However, doing a 15 gal batch per week, as I did for several months, meant keeping only 10 gals of methanol at the house, good for about 3 batches. By avoiding water-wash entirely using Graham Laming's process, and composting the glycerol, I found it quite reasonable to fuel my personal vehicle from 50-100% with homemade biodiesel.
 I want to emphasize I am talking about typical, densely packed residential neighborhoods. At the closest point the gap between the roofs of my house and my neighbor's is about 15' (I just measured it). And I have only the garage as a work area. There are plenty of residential areas in Phoenix where there is enough room to safely make hundreds of gallons of biodiesel a week in an out-building away from anyone else's property. A lot of people would disagree with that statement, though :-)