I looked into ASIC's a while ago and here's what I found:
Everybody has different definitions for the word "ASIC". There are (very roughly) three categories: FPGA Conversions, "normal" ASIC, and "full custom". As expected, these are in order of increasing price and increasing performance.
Before describing what these are, let me tell you how a chip is made... A chip has anywhere from 4 to 12+ "layers". The bottom 3 or 4 layers contains the transistors and some basic interconnectivity. The upper layers are almost entirely used to connect things together. "Masks" are kind-of like the transparencies used in the photo-etching of a PCB, but there is one mask per IC layer.
When it comes to making an ASIC, the cost of the masks is HUGE. It is not uncommon at all for a set of masks (8 layers, 35 to 50 nm) to run US$1 Million! So it is no great surprise to know that most of the "cheaper" ASIC suppliers try very hard to keep the costs of the masks down.
FPGA Conversions: There are companies that specialize in FPGA to ASIC conversions. What they do is have a somewhat standard or fixed "base" which is then customized. Essentially the first 4 or 5 layers of their chip is the same for all of their customers. It contains some logic that is similar to common FPGA's. Your "customized" version will have some additional layers on top of it for routing. Essentially you're using their logic, but connecting it up in a way that works for you. Performance of these chips is maybe 30% faster than the FPGA you started with. Back in "the day", this would also be called a "sea of gates" or "gate array" chip.
Pros: Low NRE (US$35k is about the lowest). Low minimum quantities (10k units/year).
Cons: High per-chip costs-- maybe 50% the cost of an FPGA. Low performance, relative to the other solutions.
"Normal" ASIC: In this solution, you are designing things down to the gate level. You take your VHDL/Verilog and compile it. The design for the individual gates are taken from a library of gates & devices that has been approved by the chip manufacturer (so they know it works with their process). You pay for all the masks, etc.
Pros: This is what most of the chips in the world are. Performance can be very good. Per-chip costs is low.
Cons: NRE for this starts at US$0.5 million and quickly goes up from there. Design verification is super important, since a simple screw-up will cost a lot of money. NRE+Minimum order qty is usually around US$1 million.
Full Custom: This is similar to a Normal ASIC, except that you have the flexibility to design down to the transistor level (or below). If you need to do analog design, super low power, super high performance, or anything that can't be done in a Normal ASIC, then this is the thing for you.
Pros: This requires a very specialized set of talents to do properly. Performance is great.
Cons: Same con's as Normal ASIC, only more so. Odds of screwing something up is much higher.
How you go about this really depends on how much of the work you want to take on. It could be as "simple" as giving the design files to a company like TSMC or UMC and they give you back the bare wafers. Then you have to test them, cut them apart, package them, probably re-test, and finally label them. Of course there are other companies that will do most of that work for you, so all you get back are the tested chips ready to be put on a PCB.
If you have gotten to this point and it still seems like an ASIC is what you want to do then the next step would be to start Googling for companies and talking with them. All of those companies are slightly different, so it makes sense to talk with as many of them as you can put up with. They should also be able to tell you what the next step is beyond talking with them.
An indirect answer to your question.
We have done 0.5mm pitch LQFP DIY boards.
We used 'proper' laser printable PCB Artwork Drafting film
We spent quite a lot of time calibrating the exposure time of the PCB in the UV box, and IIRC it was sensitive to a +/- 5 second variation. Too short or too long produced poor results. IIRC, we made a 'PCB' with some test patterns for different track/space distances to help us calibrate things.
We still had quite a lot of trouble getting good results. Then we discovered that the laser printer was stepping in, and trying to produce a 'grayscale' when the PCB artwork 'pixel' boundaries didn't match its own idea of pixel boundaries. When we examined the artwork under a microscope, we could see that edges were defined by a fuzzy (dithered) half-tone pattern, rather than a much denser, more uniform edge.
We improved the results by 'fiddling around' with printer settings.
Then I redid the footprint of the 0.5mm pitch LQFP part so that the gap between pads was slightly bigger. That gave better results.
Edit:
I know folks who have tried a 1,700GBP 'ebay' PCB mill. AFAIK they gave up due to difficulties getting consistent results. They have now spent a lot more to get a proper LPKF milling machine.
Edit2:
Is the entire board 'packed', with a need for 0.25mm track/space everywhere or is it mainly around the 80pin part?
Depending on where you are in your development process, and the sort of issues you are needing to fix, a way to reduce the pain might be to make a 'breakout' board for the LQFP part with your high-quality manufacturer. That would have lead-time, but once you have some, you might be able to turn-round the rest of the PCB using DIY.
It may also be the breakout PCB can solve some of your layout issues. If you put it's decoupling capacitors etc on its breakout PCB, its behaviour might be okay. My experience is manufactured vias are much smaller than DIY vias freeing up board area. Further, putting vias under the chip are awkward to do on a DIY PCB. So you might get a lot of benefit from the manufactured breakout, and hence make the remaining DIY PCB easier to route.
A traditional breakout usually has pins on 0.1" centres, in a square around the chip. You don't need to do that. You could use finer pitch connections and with pins in a non-rectangular, convenient, shape for your problem.
Maybe even consider doing a 4-layer breakout PCB, to make the rest of the board as simple to layout and make as practical.
Best Answer
Most of these local companies in fact will outsource your order to China.
You don't need to print 'Made in China' if you just ordered PCB from China. 'Made in' means place of last significant tech operation, so if Arduino's PCB is from China, but soldering is local - 'Made in Italy' is legitimate.
Premium cost is significant for real local production, maybe not 10x, but more than 2x.
If you can get it done on 2-sided PCB - just make it yourself using popular hobbiest tech. You can hire 1 guy, train him and he'll do you 2000 boards easily :-) This is popular here in Russia - guys who mastered self-made PCB sell products on self-made PCBs and save time & money of PCB production. 100 boards is very easy to do at home.