> Shouldn't /usr/local/texlive/2007/../texmf-local come before 
> /usr/local/texlive/2007/texmf ?

  It's the default on TeX Live (hence in all distributions but MikTeX).
I think the rationale is that .../texmf contains (mostly)
configuration-related things (including texmf.cnf itself), contrary to
.../texmf-dist which contains the actual TeX files.  In that respect
it's quite different from Pragma's minimals and the New Minimals, where
there is no texmf-dist.

        Arthur
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