install_local ignores installation of dependencies

I'm very interested in the idea of using a local directory of R packages as the local repo for a packrat project. I've installed R 3.1.2 on a ubuntu server along with RStudio server. I've configured all packages to be installed in a separate directory called /mythtv_extra/r_packages (for all non-packrat projects). I've initialized a new packrat project via RStudio within my home directory and added the local package directory by running packrat::set_opts(project = '~/rpodcast_code/packrat_test', local.repos = c("/mythtv_extra/r_packages")). So far so good. I would like to install a package from my local package repo in to my packrat project (for example knitr). Before creating the packrat project I installed knitr using the RStudio package pane and everything installed correctly in to my local package repo. Now in my packrat project, I'm trying to install knitr via the install_local function using this call:

install_local("knitr")

After running this I can see that knitr is now installed in the packrat package library, however none of its dependencies were installed. I tried setting an additional argument of dependencies=c("Depends", "Imports") but that did not have any effect. Is there a way I can install the dependencies of a package that are also available in the local repo when using install_local? I am using packrat version 0.4.1-1.

Start with the install_local entry point and reproduce the report using a packrat project, knitr, and the local.repos setting from the issue. Check how the dependencies argument is handled and verify that dependencies available in the local repository are installed into the project library when the behavior is corrected.