You may already know this, but it's worth getting the word out. Do
not just deny routing to 127.0.0.1. 127.0.0.1 is merely the conventional "localhost" address; however, ALL 127.x.x.x is "localhost". You can check this now on your local command line with "ping 127.1.2.3".
(This just seems to be one of those bugs that every proxy goes through at some point, just like pretty much any attempt to write a web server that serves files off disk will have at least one directory traversal bug.)