Would it be possible to ever get local variables available within the button controller application? Right now I have button control rules across RM and button controller app because some of my button rules require local variable. I know I can do it all in RM, but for the sake of organization and ease of use, I would like all button controllers to be in the button controller APP. I like how it organizes different presses under a parent device.
Agreed, in the sense that many of us prefer not to have more Hub Variables than absolutely necessary. Unfortunately, there are situations (like with BC rules) where you have no other choice. I totally understand why you're making this Feature Request, but it's been said many times that "given sufficient feature creep, all apps tend towards Rule Machine," so doubt such a change will be forthcoming any time soon.
Local Variables will be added to Button Rule 5.1 in the next release. However, you need to realize that those are local to a particular button, not across all of the Button Rules for a given instance of Button Controller. If you need a variable that spans all of the buttons, it will have to be a Hub Variable.