I have a patch that allows for cascading of local/ into local/, and local/local, and local/local/local etc

This is very useful for a hierarchy of dependent branches.

Eg:

moodle 1.9
\ ------------------ shared catalyst 1.9 branche with local mods
--------------------- client 1
--------------------- client 2

It works with version, db, capabilities (and events, when http://tracker.moodle.org/browse/MDL-17442 is resolved)