"I also owned a gun shop in Arizona, and am very familiar with the gun laws here. There are no restrictions on private transfers in Arizona (only the federal requirement that both parties be residents of Arizona)."

Does the Federal requirement stand for non-licensed individuals?

I understand that a business can not sell to someone, w/out of state residency, a handgun w/o transfer to the buying party's State through shipping to an FFL.

Does that hold true for a non-licensed individual? If there's no State law preventing such can you sell a sidearm, in your state, to someone that resides in another legally?

It appears ridiculous that I couldn't sell a firearm to a family member while they were visiting w/o having to go through all the hoop jumping & expense"

Yes, the federal requirement that both parties be residents of the same state (and that the transfer take place within that state), applies to transfers between individuals. Also, it is illegal (again, federal statute) for anybody to knowingly transfer a firearm to any individual who has had a felony conviction, or any of the other disqualifiers listed on Form 4473 (which you have undoubtedly filled out numerous times at your friendly local gun store). All this is courtesy of the Gun Control Act of 1968, which applies to all of us, whether we like it or not.