How can I arrange for mail on my local network to be delivered directly to the relevant hosts, but all other mail to be sent to my ISP's mail server? The local hosts are all DNS-registered and behave like normal Internet hosts.

Set up a first router to pick off all the domains for your local network. There are several ways you might do this. For example

local_network:
  driver = dnslookup
  transport = remote_smtp
  domains = *.mydomain.com

This does a perfectly conventional DNS routing operation, but only for the domains that match *.mydomain.com. Follow this with a `smart host' router:

internet:
  driver = manualroute
  domains = !+local_domains
  transport = remote_smtp
  route_list = * mail.isp.net

This routes any other non-local domains to the smart host.