The flag indexLocalOnly can be guessed based on the directory provider/index manager settings. Requiring this flag to be set by user opens a spot for misconfiguration.
I would also recommend to include all supported configurations in the schema directly, instead of using property list.
Marking as a duplicate of BZ1148686 as the other BZ contains more information including some discussions.
*** This bug has been marked as a duplicate of bug 1148686 ***