New initscripts add --localtime to hwclock, but this wasn't present in hwclock binary until util-linux-2.10 (according to HISTORY file). (Just
upgraded my RH6.1 initscripts and found that hwclock from util-linux-2.9w-24 rejects --localtime. That version has it documented in the man
page, but it wasn't in the source.)
Thanks for the submission; this will get fixed in initscripts-5.50-1.