I know that on Winamp for Windows, you can listen to live police scanners there via audio streams. So, people do it I know that, but not sure if its legal /ubbthreads/images/graemlins/thinking.gif . I dont see why it would be illegal. I will ask my stepdad who works for the city and see what he says.
I don't think it's illegal to stream it via internet. There may be some issues if the PD is using digitial scrambling, or if there are local ordinances prohibiting it.
It would be pointless to do that where I live - the local police have encrypted radios and use text messaging for most of their non-urgent communication.