If my midlet was to access and make changes to the local address book of a phone then what would be the way out. ??
No way out. There is no way to access address book from MIDlet due to sandbox.
If you definitely need this feature, try programming for Symbian
If a midlet run over the symbian OS then will be able to access proprietory API's that allow access to PIM ?
No, anyway it's MIDlet. Nokia APIs provide access to some features that should not be allowed in J2ME devices (Like FullScreen), but not to PIM