no, this cannot be done (at least not reliably). The .local domain is reserved for mdns.
By default, OpenWrt will use the .lan domain, and you can change that to something else, if you so please.
That said, if your devices have mdns enabled, you should be able to do this resolution without the router involved anyway. And you can install mdns pacakages on OpenWrt.
OK thank you I'll checkout mdns as I have not heard of it. I did a solution with isc-dhcp and bind which seems to be OK but for me the best solution would be to implement it on the router itself. Problem is that I do need some static DNS for moosefs too and the lxd containers shall get their IP's via DHCP.