In FuseESB we are ignoring local repo settings in settings.xml; In order to use a local repo in someplace other than the default location, you have to change settings in both org.ops4j.pax.url.mvn.cfg and org.fusesource.fabric.fab.osgi.url.cfg, even though those files include the following text:

#

1. Path to the local maven repository which is used to avoid downloading
2. artifacts when they already exist locally.
3. The value of this property will be extracted from the settings.xml file
4. above, or defaulted to:
5. System.getProperty( "user.home" ) + "/.m2/repository"
   #
   #org.ops4j.pax.url.mvn.localRepository=