Restricting Command+tab options to only apps that are in the current space

control+F4. Cycles through the applications in that Space.
(I actually have this mapped to control+`; which I find easier to remember, being close to the cmd+`; to cycle through an application's windows.)

To change the keyboard shortcut, go to the Keyboard preferences, Keyboard Shortcuts, and Keyboard & Text Input. It's the 'Move focus to active or next window' option.

(Edit to fix the keyboard shortcuts; I didn't realise that the backtick character wasn't showing up.)

Yosemite

This behavior can be mapped to your desired key combination like so:

System Preferences > Keyboard > Shortcuts > Keyboard > Move focus to active or next window

Mavericks

^F4 does switch through windows in the current space but you may have to upgrade to Yosemite to map this behavior to ^~.

But the problem can still be alleviated like so:

System Preferences > Mission Control > Uncheck "When switching to an application, switch to a Space with open windows for the application"