In characteristic zero, local monomialization is true along any valuation. However, we have recently shown that local monomialization is not always true in positive characteristic, even in two dimensional algebraic function fields. In this paper we show that local monomialization is true for defectless extensions of two dimensional excellent local rings, extending an earlier result of Piltant and the author for two dimensional algebraic function fields over an algebraically closed field. We also give theorems showing that in many cases there are good stable forms of the extension of associated graded rings in a finite separable field extension.
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