Local doesn't just mean that the scope of the variable is limited to a script, it means that it is limited to the local environment, for example a variable declare as local within a for loop is not visible outside the for loop!
A single 'script' can contains many environments within which can be many local variables.
Anyhow, if you want to effect an entities health you need to do it using the SetEntityHealth function.
Been there, done that, got all the T-Shirts!
