The concept of local happiness is a needless addition that acts only to increases the complexity of Civ5's nomenclature. The same functional effect could have easily been achieved without the confusion introduced by subclassing happiness. Here's how: for any effect that would generate local happiness in the new system, instead have it reduce the unhappiness generated by that city. Why the devs failed to see this option is difficult for me to understand. It is a much simpler way toward the same end and it doesn't change any of the fundamental concepts of the game. Just my thoughts on the matter.