Hi DT99, and welcome to BYC.
The way I have come to think about this is that local regulations such as zoning and ordinances apply to folks who wish to keep chickens as pets, or for non-commercial purposes. This likely represents the vast majority of people who would like to keep chickens in residential and urban areas.
On the other hand, a small number of people wish to establish commercial farming operations to sell eggs, chicks, feathers, or even compost. For these people, according to state law the local regulations do not apply if the meet the following 3 requirements:
1. have a farming operation (e.g., chickens),
2. be commercial (e.g., sell eggs),
3. follow generally accepted agricultural management practices (GAAMPS)
So it is no surprise if local regulations for non-commercial operations conflict with state law for commercial operations, since they really do regulate different kinds of operations - although it does seem as if in your case the local laws conflict with each other, which is certainly unfortunate!
What is currently under urgent discussion here are proposed changes to the GAAMPS that will change the 3 requirements above quite drastically, as they will exempt everyone who does not live on agriculturally-zoned land from RTF protection. I have estimated that this affects 8 million Michigan citizens from a total population of 10 million - and that is based just on the fact that 80 percent of Michigan citizens live in "urban" areas, and 20 percent in "rural" areas. Other BYCers have pointed out that many people who live in rural areas will also be affected. One BYCer estimated that half of all farms over 20 acres in Muskegon County, for example, will lose RTF protection if this new language passes. Thus my estimate of 8 million affected by these changes may actually be an under-estimate of the impact of the proposed changes.
The proposed changes to the 2013 GAAMPS were formally presented to the Ag Commission a few weeks ago (October 31st), with a vote by the 5-member Ag Commission slated for December 12th. A number of us will be attending, and you - and any other RTFarmers out there - are invited to join us. In addition, to make sure that we are never again blind-sided by state-level regulations that aim to exempt us from RTF protection we have created a new organization - Backyard Chicken Keepers of Michigan - to advocate at both the state and local levels for the right to engage in agricultural activity. We're gearing up for our next meeting; hope anyone interested will PM me for more information.