another option (I agree with you that it should be broad as I outlined above) is to say that the Ranks you put into a skill is your knowledge of local things. when you move to another area you continue to put ranks in Knowledge (Local) but you take a penalty on the check equal to the number of ranks you have in different areas, but only for a few weeks by then you have learnt about the new area and can use ALL your ranks freely...
To me, that's seems a bit confusing and possibly requires record keeping when, instead, all we need to do is change the DC.
To continue to use the Hyborian example: Barbarians may need a DC 5, 10, or 15 to know something about their own clan, clan territories, or surrounding area. Move the DC up the least likely it is that the Barbarian will know a particular detail.
For example, knowing something about a rival clan may just mean normal DC +5. Knowing something on the other side of the kingdom may mean normal DC +10.
Knowing something about the Vanir, Aesir, Hyperboreans, Border Kingdom, Nemedians, Aquilonians, or Picts (all border Cimmeria), the DC is even higher.
And, so on.
But, the GM needs to use common sense, too. The great Ice Worms of Nordheim are so infamous that many adventurers know of them, far and wide. Thus, the GM would not give such a high DC on the check as he would for some other, less well known, detail.
Knowledge (Local) covers identification of all humanoids, whether it's humans from your own clan, goblins from across the river, elves from over the mountains, or whatever else.
This doesn't quite wash with me. For example, how many stories and scenarios have you read where the main character comes to a new village and the villagers are scared of "the dark menace from the hills". At the slightest menion, the villagers know of the menace, but the heroes know nothing at first and try to find out more info.
Things like legends, traditions, and customs are generally shared throughout a culture, so to use your Hyborian example, even if you have several clans of Cimmerians spread out over a wide area, you can expect them to share the same general culture.
Sure, but what about outside that area of influence. All the Cimmerians have a shared culture. I can buy that. And, the Nordheimers and Picts, also barbaric cultures, probably share some things in common, though there are a lot of differences too. But, go wider. The farther you get from Cimmeria, the less true it is what you posit. Cimmerian culture vs. Aquilonian culture. Cimmerian culture vs. Khitian culture. Cimmerian culture vs. Turanian culture. Cimmerian culture vs. Stygian culture.
And so on.
Thus, I've always interpreted the "Local" in Knowledge (Local) to refer to the scope of the skill--focusing on the differences and similarities between nations and cultures rather than large-scale skills like Knowledge (Geography), which represents knowledge of all sorts of terrain and climate, or Knowledge (History), which represents knowledge of the several thousand years of history of a given world--rather than referring to the locality of a particular region.
But, in my Core Rulebook (Conan RPG--which may be different than the D&D version), it specifically states that the skill covers legends, personalities, inhabitants, laws, customs, and traditions--and can, in fact, be used in place of Knowlege Geography, History, Nature, Nobility & Royalty, Religion, or Rumors.
I should note, though, that the 2E Conan rulebook's (the 3.5 version) description indicates a narrow look at the skill--that it should be taken, over and over, for different locales.
