Hi Kevin,
I would try examining the geodatabase locks by right-clicking the SDE connection and going to Administration > Administer Geodatabase and then looking at the locks tab. This could give you some info about what users/processes are locking your output feature class.
Also, does running your script without declaring all those local variables make a difference? I have heard that creating a variable pointing to a feature class can lock it up because the variable represents a pointer from python exe. Just a thought.
You might also be able to make use of the TestSchemaLock—ArcPy Functions | ArcGIS Desktop function to test whether you can get an exclusive schema lock on your target dataset.
Good luck,
Micah