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American "village" wines

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One of my favorite recurring wine stories involves the travelers who, on a jaunt through Europe, are amazed at the quality and value of the 'local wine' which is served in any and every cafe or bistrot from the toe of the boot to the westernmost cliffs facing the Atlantic. As anyone who has traveled across the pond will tell you, the wine you get with meals which comes out of a barrel in the back, and is made in the co-op just up the road, can taste as good as the ones we get for 30 or 40 dollars a bottle back home.
Can this be true? Might it just be a case of 'magic in the moment', where the very fact that you were already into your third glass of wine in the early afternoon while tucking into an incomparably fresh omelette aux herbes fines or sensuously funky jamon serrano, or could wine that cheap actually be that good? (anyone have a favorite story about this -- in agreement or otherwise?)
I say it can. The reason that the five to ten dollar bottle of American wine tastes like it's worth five to ten bucks (or less) is because it's made by a huge factory which sources grapes from all over the place, throwing them together into massive blends of millions of gallons in order to deliver a moderately priced bottle. I will concede that what these folks are able to achieve with mass-produced wines is quite impressive, in terms of continuity of style and maintaining a general level of quality, but I feel safe in saying that they come up short on personality, memorability, and even food friendliness.
Without over-romanticizing the local village vintner or co-op, they're more likely to turn out a product -- no matter how primitive the conditions, no matter how maligned the grape variety -- that has enough character, flair, food-friendliness (specifically to the local cuisine, but probably in general as well), and regional typicity to put Californian bottles which cost twice as much to shame.
Now, don't think I'm saying you can't get a good bottle of California wine at a good price (they can still be found!), or that you have to travel to Europe to enjoy the fruits of the local village wines. Here's what I do instead: Head down to your favorite wine shop (K&L, the Ferry Building Wine Merchant and the Jug Shop are my favorites; BevMo is fun too but you can't usually speak directly with their wine buyers), tell them you want to spend next to nothing on a fun and satisfying wine (odds are good it will come from Europe, though Australia has some good bargains as well), and go home and cook up a dinner of whatever fare is typical of the region your wine came from. Who knows? The friends you have over to share in your provincial meal may go home with stories similar to the ones brought back from the 'old country'... So, what time should I be there?

For inspiration, here are a few of my current favorite varieties:

From Portugal: any dry red table wine, or Vinho Verde

Spain: Albarino, Garnacha (Grenache), Fino and Amontillado Sherry

France: Muscadet, Beaujolais (both Nouveau and non-Nouveau), Rose from Provence

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Austria: Gruner Veltliner

Italy: Nero D'Avolo from Sicily, Kerner from Alto Adige, or something similar the merchant is excited about

Greece: Xynomavro, or again, trust the vendor

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