Thanks for this thread & the ideas. I have never been stopped by the police, but was curious what one should do (besides the obvious, tell the truth). I've had to talk to a firefighter about one because the cache was hidden (with permission) next to the fire station. He laughed and gave me a clue.
My town is littered with a good 400 caches, and the police have been called on at least one that was thought to be a bomb. I'm sure most of them have heard of geocaching, but better safe than sorry.
I'll be printing out the flyers and posting a note on my car if I have to park at a distant area.