Since compilation buffers go as far as to print the directory they're
running on at the top of the buffer, I think it's pretty clear they
should receive dir-local variables.

So I'd suggest the attached patch, which does that and also removes a
more limited mechanism I added some time ago to allow compilation with
project-specific settings.  I've CC'ed Stefan since at the time he kind
of supported the changes I'm now suggesting to remove.