Update (15.9.07). Supports Maya 2008. Added menu item for Maya version 2008.
Update (23.1.07). Supports Maya 8.5. Added menu items for Maya versions 8.0, 8.5.
This tool was designed to allow transformation of objects/components in
various local axes. You can, for example, rotate around an edge, vertex
normal/position, move in the plane of the face, scale to its normal.
You may use any object local space as a reference for the
transformation, align pivot between two points/objects, and much more.
You could easily rotate a finger of the character in it's complex axis,
make it longer, position things along custom lines and many other
things.
You can also bake the orientation to the object, aligning object local axes along edges, etc.
You can also scale in screen space with this tool. Check "Use
Orientation Only". Enter the tool and instead of picking
compnents/objects go to View --> Select Camera. Now you're able to
scale in screen space 
Don't forget to use HUD shortcuts for accessing the Option Box and locking the pivot.
I've made an online documentation for the tool:
http://www.henrykorol.com/Scripts/LocalTools/LTDocIntroduction.htm
Please visit the download page for the video demo of the tool, I recomend to download the high quality version if you can.
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