Wouldn't the act of allowing this service to scan your docs potentially violate compliance, if the data there does contain things that shouldn't leak?
Everything I see reads like you have a strange understanding of "local" and shouldn't be trusted with building such software.
That... doesn't sound local, dude. "Locally" would mean that the LLM is actively running in my browser, and in my browser only, which is not what you're describing.
I understand that you're claiming that the documents aren't being stored permanently, but they're still being transferred to your servers, and their full contents are being read there by something.