So, I guess I should have suggested a third possibility. The commands you are trying to use will not be effective until there is an X server running (the computer has gone to a graphics/desktop mode). The boot process and login happens before your X session starts, so there is no $DISPLAY for your xset program to find when run from rc.local. You seem to have some scheme (mate?) that I've never heard of, but which seem to run some defined set of scripts or commands in response to some event that occurs after the X server is started.
This hypothesis is consistent with the testing phase, where all of your tests are performed post-startup, when everything has booted and the X session is already active.
Last edited by theNbomr; 01-01-2013 at 03:37 PM.