I just went as far as addressing the issue of the CZ being played as an external module, but local off would be good to have (as you and Summa noted) if you want to sent note on/note off commands from the CZ keyboard and not have the CZ synth engine play sounds.
Again, I have experience with the CZ3000/CZ5000, but as Summa suggested, it might work on the CZ-101.
For example, you might have an external device or external software that will take midi notes from the CZ, so something with that note, and the send something to be played from the CZ's synth engine. We can call this midi data processing.
For example, if I had this setup:
Casio CZ midi out (local off) ===> E-Mu Proteus 2000 (with no sound ROMS) midi in ===> Casio CZ midi in
I could play a note on the CZ's keyboard and have an arpeggiator pattern from the P2K play the arp pattern on the CZ's synth engine.
This is the technique I used ages ago to create an infinite keysplit on the CZ-5000, where each note could play a different patch and I could have up to 8 different patches playing at once in realtime from the CZ keyboard itself (well, going through the C64 as a midi data processor, that is)..
CZ ===> Commodore 64 running a custom program I wrote ===> CZ.
I won't go into the details because I probably wrote about them here a few years ago, but the point is, in this case, I had the CZ set to local = off.
I should mention that I had the CZ in the mode where I had 8 consecutive monophonic midi channels. (Basically, my program did a little dynamic channel assignment and channelized the note data to one of the 8 channels. Toot--toot: This was a couple of decades (or maybe close to three decades) IIRC before Rolli or whoever it was "invented" channelizing midi data to make "expressive midi.")
Anyhow, to test to see if the CZ-101 accepts local off commands (control changes, not sysex), turn it off on your basic channel with a control change and see if notes don't reach the synth engine from the keypresses.
The Nov. 1985 CZ Guidebook for MIDI indicates that the CZ-101 does indeed recognize local off/local on. See the page numbered 14 which is page 15 of the pdf.
Also, page 25 of the CZ-101 manual (page 26 of the pdf) shows that the CZ-101 responds to local off.
I hope this helps.
Steve