Reported by Andy Goralczyk (@eyecandy) over IRC, thanks! Simply nuke all that poor broken custom one-by-one handling in object_relations.c code, and use highly complex but powerful and well-tested BKE_library_make_local() in all cases of MakeLocal! ID management, especially related to linking, is very hairy matters, better to have as few as possible core functions managing all the dirty details. ;)