You can! I've added my locals to my list and it works flawlessly. There are 2 ways to do it, one requires you to create a m3u file with your hdhomerun channels, or alternatively you can do it manually. I did it manually since I just wanted to add my local channels and I only needed to add a few.

If you want to create a m3u file here's a reddit post that may be useful: Reddit

If you want to go manual do this:

Either choice you make, you'll need to create a new M3U line in Xtream editor. For me I wanted to integrate my channels with my other iptv services so I created a m3u line (it's the top section) with my iptv info. From there I added a channel (using the "+" icon) and you can then add your local hdhomerun channels. See this screenshot:

Screenshot

You'll need to find the url for each channel (mine was easy after I found the first one since all that i needed to change was the channel number on the end). You'll also need to know the internal url for you hdhomerun prime (and make sure it's got a static IP address).

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Edit: Other points to consider:

1. I haven't gotten the epg to show up for my local channels. Instead I just use the national feed (ex. use the CBS feed for my local CBS channel). It won't match up perfectly, but should get you 90% of what you need.
2. I watch using a Nvidia Shield and the Tivimate app. I haven't been able to get my local channels working when using a VPN. That's not critical for me, but if that's important to you then you may need to do some legwork.

You can look at xteve for this.

No. You can't. There are other ways to do it but it's a bit complicated. I use tvheadend to combine my iptv and hdhomerun.