Nice idea. I like the concept and never really thought much of freecycle as it's really nothing more than a semi-managed yahoo group.

Your first big challenge will be to get enough people to use it to generate critical mass.

Maybe you could promote your items as links on freecycle to generate some traffic?

Also, most local forums have some sort of "buy it sell it" area. Given that it's a free service I'm sure you could get some interest via whirlpool, ozbargain, ocau and maybe even more specialised sites like aussiehomebrewer etc.

Start building some links to your site.

Good luck.