I am a big supporter of urban deer hunts. There are alot of cities on the east coast that do it for whitetail, I just have never heard of it being done for mule deer.
However, if there is some place that has a population that is big enough to support a deer hunt in town, then why not. I just think that, due to the fact that you will be more likely to be in the public eye, you should control who can hunt there, by passing proficiency tests, and issuing permits.
You should have the most responsible hunters out there, if at all possible.
There are many places that you could do this with a bow and in some cases a rifle depending on the definition of town. Many places are considered part of a town but outside city limits and therefore still legal. Up until about 15 years ago where I live my incle used to shoot at geese as they flew over the property heading for the river. Although still technically leagal it would no longer be a very good idea with all the houses that have been built up around them. We had a nice buck in the yard the other evening and if around in hunting season would be leagal to shoot with a bow for sure but the problem is he could end up dying on someone elses property and then the fighting would start.
Any way under ideal conditions I see no problem with it at all but I know for sure that there are many who do.
I've spent countless hours either on my hands and knees or bent over, messing up my back, looking for blood. One such instance I remember most was a hog hunt a few years ago in Mississippi. I had never shot a hog so when I poked a hole in this guy; I was determined to find him. Wearing snake leggings, I crawled on my hands and knees through the briars and the brambles and bushes where a rabbit wouldn't go. I found a spot of blood here and there but never the pig. And lucky for me, I didn't find...