Hey WhizBang - since I posted my response last May, I have gotten into these things in a big way. I've actually sold 75+ engine kits and several assembled bikes. The Grubee 2 stroke kits are available here in the USA again after they jumped through the necessary hoops for EPA approval. These are the ones that I will be ordering in quantities this season.
When I asked the DMV office in Burlington, the supervisor there said that a bike with an engine attached to it was regulated by my town, not the DMV. I called my local police and asked if they banned motorized bikes, and they said no. (but they do ban pocket bikes and gopeds) Customers in Hamilton, Lawrence, Princeton, etc. have called their local police and have gotten similar answers. To my knowledge, nobody has been hassled by the cops. I see them all the time as I putt-putt at about 20mph. Most just smile and maybe even wave. I have gotten pulled over on my Lifan CT-70 replica (licensed and insured!) but never on the motorized bike! Go figure.