test-lib: mark function variables as local

Several functions in test/test-lib.sh used variable names that are
also used outside of those functions (e.g. $output and $expected are
used in many of the test scripts), but they are not expected to
communicate via those variables.

We mark those variables "local" within test-lib.sh so that they do not
get clobbered when used outside test-lib.

We also move the local variable declarations to beginning of each
function, to avoid weird gotchas with local variable declarations as
described in https://tldp.org/LDP/abs/html/localvar.html.

Signed-off-by: Daniel Kahn Gillmor <dkg@fifthhorseman.net>

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