Hello,
my situation is this:
rpm -qa|grep kernel
gives:
kernel-smp-2.6.14-1.1771_FC5
kernel-2.6.14-1.1773_FC5
kernel-smp-2.6.14-1.1773_FC5
kernel-2.6.14-1.1771_FC5

in the local directory ls -1 kernel*
kernel-2.6.14-1.1773_FC5.i586.rpm
kernel-2.6.14-1.1773_FC5.i686.rpm
kernel-devel-2.6.14-1.1773_FC5.i586.rpm
kernel-devel-2.6.14-1.1773_FC5.i686.rpm
kernel-doc-2.6.14-1.1773_FC5.noarch.rpm
kernel-smp-2.6.14-1.1773_FC5.i686.rpm
kernel-smp-devel-2.6.14-1.1773_FC5.i686.rpm
kernel-xen-guest-2.6.12-1.13_FC5.i686.rpm
kernel-xen-guest-devel-2.6.12-1.13_FC5.i686.rpm
kernel-xen-hypervisor-2.6.12-1.13_FC5.i686.rpm
kernel-xen-hypervisor-devel-2.6.12-1.13_FC5.i686.rpm

command
yum localupdate *rpm

at the end I have:

=============================================================================
Installing:
 kernel                  i686       2.6.14-1.1773_FC5  kernel-2.6.14-1.1773_FC5.i686.rpm   33 M
 kernel-smp              i686       2.6.14-1.1773_FC5  kernel-smp-2.6.14-1.1773_FC5.i686.rpm   38 M
Removing:
 kernel                  i686       2.6.14-1.1771_FC5  installed          33 M
 kernel-smp              i686       2.6.14-1.1771_FC5  installed          38 M

Transaction Summary
=============================================================================
Install      2 Package(s)
Update       0 Package(s)
Remove       2 Package(s)
Total download size: 70 M
Is this ok [y/N]: y
Downloading Packages:
Running Transaction Test
Finished Transaction Test


Transaction Check Error:   package kernel-2.6.14-1.1773_FC5 is already installed  package kernel-smp-2.6.14-1.1773_FC5 is already installed

It seems yum is not able to manage where multiple versions of kernel are installed
I would expect a message like "nothing to be updated".
Gianluca