I sent the following feature request to Harmony. If you think this would be a suitable replacement of the "automatic propagation" feature please email them as well. Hopefully, they'll be willing to add this if there is enough demand:

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Now that Logitech updated the Harmony software to remove the automatic
propagation of custom buttons across activities that share the same device
there is now a need to re-add this tossed behavior in a more intelligent
fashion.

Consider a TV device. A user might want all activities to share certain
buttons, such as "input" and "aspect". Also, some users might not want any
TV buttons to be used for their "Watch movie" activity (which, as I
understand it, is the reason you dropped the propagation feature).

It seems as though Logitech has gone from one extreme to another and
upsetting many users in the process (as you can see on the Remote Central
forum). However, a simple solution that should be able to satisfy the
majority of situations without upsetting users would be the following
implementation:

Currently, when viewing the device level buttons you have 2 pages: "Standard
Buttons" and "Additional Buttons". However, if you added a 3rd page "Shared
buttons" (or similar) which would be empty by default which would indicate
that no buttons will be shared across activities. Alternatively, a user can
add a complete set or subset of the device buttons. Any buttons added to the
"Shared buttons" would be applied to all activities that use the device. So
if all activities that used the TV device need the "Aspect" button then that
could be added to "Shared buttons". Each activity that uses the TV would
then have the shared buttons, but the user can add additional TV buttons for
specific activities.

With this implementation, a user has the option of not having any buttons
propagate or having some buttons propagate which should satisfy both
extremes.