The idea of a recurring event having a flag, local or universal time is interesting. Really all events should have that. Right now, I believe events are stored with the system timezone exclusively. But only on PostgreSQL. No timezone data is stored on Oracle installs.
Probably the correct behavior is to allow setting the timezone of the event for every event. Then the local time of the event could be chosen and could be displayed in the calendar.
There is an almost infinite number of ways to tweak the behavior of the calendar. It all depends on what a user expects. I am basically comparing other calendar software, hoping those developers have done the research into what is best for most users.
