dd bs=1M if=$localback |lzop -c - > /mnt/local$localpath$localimagename
I use lzop for compression of image, since it gives good compress and is considerable faster than gzip.
Note: Since it does copy all blocks, it is best to clear the currently unused blocks before hand. Long ago, did an image of a disk with clean install of Fedora 3 on 80GB disk. Image created was 12G in size compress. Cleared free space, and redid imaged, and size dropped to 2.5G. Compression does depend on what is on disk..