No one wants to touch this hot potato... well, I will give it a try.

I have never used up2date and possibly never will. If you don't like it, why use it? Looking at up2date's docs, I see option to specify directories containing patches. It can get patches from directories and remote servers, so what might it be missing? This is the problem with your post... you only seem to state that you find up2date disagreeable but you give no clue as to what you actually want.

At my last job, a deployed server was frozen... no patching allowed. In theory a deployed server was tested and found to working correctly prior to deployment, so "if ain't broke, don't fix it". At some point, it would be redeployed with the latest OS, and DB server, etc... but frozen again. If a frozen system had a problem, we had to get approval for a patch. Once approved, it could be installed. On redhat, this took the form of a tarball with an rpm file or two that was ftp'ed or (scp'ed or whatever) into place.

As I said, it looks like up2date can function without a local server, but I don't see a local server as big deal. Most companies upgrade servers from time to time. And so servers from yester-year are usually available to be pressed into service. Even an old pentuim-pro with 10 GB of disk should work for this. Management usually seems love it when an old box is taken off the scrap heap and re-used. And I doubt that it needs to be a dedicated box. It could also run big brother to monitor the boxes, serve as an ntp server, etc. Nothing on the scrap heap? Then buy an old box off ebay. If a box like this dies, you can usually go a day or two without patches or ntp updates while it is fixed or replaced. So I do not see the big cost here that you do.