This is standard operating procedure for MLB. It came down that way in Boston two years ago. In the nearby Providence, RI market, the Red Sox affiliate ran the ESPN feed of the game, as well as the regular ESPN station there. In the case of the Red Sox, affiliates ran the local pre-game and postgame shows, then switched to ESPN for the actual game play.
That's correct. It's been that way for quite some time. At a station I worked we were on the team's network up to the WS. Then we had to go to the ESPN feed for the WS. Some time later, we had the same situation only we didn't carry the WS afterward. We only went up to the LCS, then that was it. It's my understanding that depending on the market, the rights fees for ESPN's coverage can be pretty high.