Is it possible to have multiple local sandboxes off the same stream?

You're on the right track. You can read up this basic workflow here: https://jazz.net/library/article/41 (in your case, think of rw1 as Jason and rw2 as Markus).

One correction to make first though is that you cannot have any "local workspaces" off the same "stream". (and here I am referring to streams as being different than repository workspaces, even though they are similar in some aspects). Notice your own diagram that you made - your local workspaces ws1 and ws2 are connected to rs1 and rs2. Those edges are very different than the edges that connect rs1/rs2 to dev-foo.

You have a stream with two repository workspaces - good

You have each repository workspace loaded to their own local sandbox - good.

There are 3 more steps:

1) Check in your unresolved change from ws1 to rw1 (into a change set). Unresolved changes are only known by your local machine. The tutorial suggests that you can turn on auto-checkin if you prefer that workflow. That way ws1 and rw1 will always "be in sync". (there are pros and cons to having this turned on, that I will leave out)

2) Deliver your change set from rw1 to the stream dev-foo. Generally, you can think of Repository Workspaces as private copies of streams. They are a place for you to do your work. When you are ready, you deliver change sets to the stream which are places for an entire team to do collaborative work. In a simple work flow, other Repository Workspaces cannot readily get your change set until it makes it's way "up" to the stream first.

3) Accept the change set from stream dev-foo to rw2. Accepting change sets will automatically sync rw2 with the local sandbox ws2.

Now if you switch eclipse workspaces, you should have your modifications.