The debut feels slightly different because of the presence of immediately-fired singer David Palmer, a bit, and the songs are generally pretty easy going and youthful. They were doing sarcastic lyrics and quirky topics, but nothing like "Everyone's Gone To The Movies" yet. There's also a bit more guitar rawk on Can't Buy A Thrill, stuff like "Change Of The Guard" (which I LOVED) wouldn't have been so well placed on a later album.
But yes, it very much sounds like early 70s Los Angeles, and their general lyrical outlook reeks of being in a world of people being totally self-absorbed and neurotic and hedonistic, or whatever I've picked up on as being the general perception of 70s LA. Hey, I wasn't there, but Steely Dan go GREAT with The Long Goodbye!
I guess this marks Steely Dan as another story of people who weren't from LA but ended up there, Becker and Fagen attended college in upstate New York with Chevy Chase and G Gordon Liddy (RIP!!!) busted the place, that's the one cool story associated with the band (I said *cool* story--Becker turning into a junkie and sort of getting his girlfriend killed is just a downer.)
The liner notes to Countdown To Ecstasy's CD reissue are quite hilarious, detailing how the band's live shows were going to hell due to the California heat or whatever, how one of their songs had been ruined by someone eating a sandwich in the control room or something and getting mustard on their tapes, and how the record executives listening to the album "thought they were listening to some sort of weird German art music or something" and then found out that they'd stolen the proofs for their artwork, fired their suave Daltreyesque lead singer, and insisted on issuing "Show Biz Kids" as the first single even though the lyrics had the word "f*ck" in there, "they weren't surprised. They'd seen it all before."
The Royal Scam - You named the two best tracks, but I'd also stick up for "The Caves Of Altamira," which again sounds like elevator music but the good kind.