I first opened this suggestion on the answerhub, but it appears to easily become buried among questions there, so I also post it here.
Currently the “Route 1st Gamepad to 2nd Client” under Editor Preferences -> Level Editor -> Play -> Multiplayer Options options, only seem to work when you have multiple windows, one for each player.
Me among others would like this to also work when multiple players are present in the same window. Since currently this feature only seem to be beneficial to non-local multiplayer games.