I do this with Squid, or Fiddler depending on platform.
I have done a similar trick for the entire lan by doing port forwarding on DD-WRT and similar.
I pretty routinely highjack ports as domains for doing local testing. If I want to make sure that I'm hitting my own cached version of an API that I need to consume from a third party I just serve it from local. That way I can dev offline, or guarantee that I will always get the same response, or a much faster response. I could Mock it, or do a number of other things, but it is often nice to be able to see what is going over the wire, and using a proxy to handle the redirect and port change is one of the best ways to do so.
