Does localupdate work as you expect and give you a "nothing to
update" message when you try to update something which is already
installed other than a kernel via localupdate?
It seems it works:
ls -1| grep -v ^kernel > /tmp/list
yum localupdate $(cat /tmp/list)
xterm-207-8.i386.rpm: does not update installed package.
yelp-2.13.2-2.i386.rpm: does not update installed package.
ypbind-1.17.2-5.1.i386.rpm: does not update installed package.
yp-tools-2.8-8.1.i386.rpm: does not update installed package.
yum-2.5.0-4.noarch.rpm: does not update installed package.
zip-2.31-1.1.i386.rpm: does not update installed package.
zisofs-tools-1.0.6-3.1.i386.rpm: does not update installed package.
zlib-1.2.3-1.1.i386.rpm: does not update installed package.
zlib-devel-1.2.3-1.1.i386.rpm: does not update installed package.
zsh-4.2.5-1.i386.rpm: does not update installed package.
Nothing to do
Eventually I will file a bug (I will learn ho to...)
Gianluca