To answer my question, after some search I found the following solution:
I Added the following to the end of my decorator page (after including jquery.js)
<decorator:getProperty property="page.local_script"></decorator:getProperty>
I also added the following
<content tag="local_script"> <script> $(function() { alert("Starting"); }); </script> </content>
The decorated result page contained the contents of the local_script tag exactly where I wanted them and everything worked fine :)
I don't know why this feature of sitemesh is not properly documented - using this you can have a great templating behaviour (like django).