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Hello, Eroding -
The block I'm going to suggest to you for the retaining walls is County Block from County Materials (on Prospect just east of 41, Appleton). They are hollow core units, meaning there's a big void in the middle of them. This makes them lighter, but when installed properly they'll provide the same earth-retaining strength as a solid unit. The price you pay in using these blocks is you have to use 3/4" clear stone to fill in those voids, and pack it tight with a hand tamper. Overall you'll end up spending a bit less money on materials, but it'll take more time to build.
As for buying blocks from a local supplier over a big box store - absolutely do it. I know from talking to manaufacturers that when even the local companies run lots for Menards, Home Depot, etc, they are run much faster to fill their huge orders - but in going faster sometimes the blocks aren't as close to specs as they should be, and the product quality just isn't as good. Plus as you mentioned, there may not even be a price benefit to buying from Big Box.
Regarding the distance between the walls - at the closest point, the walls that are 3' apart may need to have some geogrid used in them to ensure a stable installation. Bring your sketch into County Materials and explain to them the heights of the walls and distances from each other and their respective heights - they be able to tell you exactly what you'll need.
Depending on the slope of the yard, the first 2.5' wall may do enough for awhile - can't really say without seeing the place.
As for a ballpark patio price - I'll send you a PM for that.
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