Some programs, notably BLASTCLUST, perform clustering based on pair-wise local alignments. I believe the approach of local clustering is fundamentally flawed for most applications, so USEARCH does not support it. If you have an application that really does need local clustering, I will be glad to add it to USEARCH.
The problem is illustrated in
the figure above. Colors represent homologous segments, e.g.
protein domains. Local alignments are indicated by arrows. Each
adjacent pair has at least one homologous segment, but the first
and last sequence have no homology.