I've been slowly migrating away from externally hosted solutions, and as another step in that I've abandoned Google Reader for RSS reading.
Today I have finally fully moved to Tiny Tiny RSS (source available from http://tt-rss.org) due to the web version being similar to Google Reader in many ways (and improved in the ways I care about), and having a decent Android client. I was using their hosted solution temporarily to make sure that it would work for me, and when that stopped working recently it was the impetus I needed to install a server locally.
It strikes me that having a service like this running should be something that almost anyone could do, but the setup & administration is a bit onerous. I wonder how difficult it would be to bundle up services such as these so that regular users could install them on their home computers with only needing to change a few settings for their particular situation. It seems that other services like Skype, bittorrent, pagekite, etc, focus on making it easy for everyone to run services locally but available globally, even across annoyances such as NAT translation and ISPs with draconian filters. Perhaps a project to enable users to quickly setup their own XMPP, RSS, and WebDAV server would be useful and rewarding.