I tried this with LimeWire 2.6.3 earlier this month and it sort of worked. What I did was in the Options > Filters > Hosts add *.*.*.* to the Filter Hosts section to exclude all at first and then added my local netblocks to the Allow Hosts section such as 141.51.*.*

You might need to relaunch LimeWire for those changes to take full effect. The setup was fine but the usage didn't work so well. Upload requests from outside the LAN still reached my computer as shown by my firewall logs, since the local hosts I connected to were still connected to the Internet and the query hits continued onto there. LimeWire ignored the upload requests since they were not in the LAN.

When I was downloading one file it downloaded from two sources even though I was pretty sure that the second source was not on the LAN. In other words while you deny uploads to the Internet apparently you can leech from it for downloads. Search results for queries I sent out were limited to the LAN. Most importantly, it was hard to maintain a connection since LimeWire didn't have enough local IPs to connect to. A custom gnutella.net filled with local IPs may have helped here.

Gnucleus has a separate LAN version.