Well, since you brought up notion of using just "%Local Var%", you obviously understand the benefit. Any chance you might fix the token evaluation method to work with this in the future? Since it works with "%Variable%Var%", hopefully it is not too grievous of a change.
The problem is that I don't want to just convert any unknown token to nothing, that would be very confusing every time you mistyped a token.
I could special case %Local xxx% tokens, but that still has the same issue - if you just mistype the variable, the result will “disappear”. Which, I suppose, is true of any mistyped variable name in a %Variable%% token.
So I don't really like the idea of just returning nothing when Keyboard Maestro doesn’t know what you are asking.