I tried this but it doesn't work (and it's more restricting than a plain "LOCAL" anyway). But I figured it out. "LOCAL", as per the manpage, accepts any hostname that doesn't contain a dot in it. I'm so used to using "localhost" alone that I forgot that my full local hostname is rather localhost.localdomain, not localhost. I rarely use the full hostname. For example, even in most log files my hostname is usually listed as just "localhost".

Anyway, "nntps: localhost.localdomain" fixed it for me. Sorry for the noise.

~Yousef