How to use hosts.allow or hosts.deny in Android
As far as I know, Android isn't setup to use hosts.allow and hosts.deny

However, it is setup to use a standard hosts file in /system/etc/hosts

Unfortunately, it doesn't support wildcards, so it might be difficult to limit the device to a single domain via that method.

iptables probably are your best bet - perhaps you could post the rules you attempted, and I can see if there's anything that could be causing them to run too slow?