Why does Yosemite Safari never time out trying to go to *.local?
I suppose it's because looking up a .local hostname is basically a browsing request for Bonjour services; devices &amp; services register themselves through multicast, so since foobar.local points to no IP (unless you create it), Safari probably never reaches the stage of testing a site's reachability.

In your situation I'd rather a) setup a simple DNS server to reroute requests or b) announce your services through dns-sd:

dns-sd -P Webservice _http._tcp local 80 foobar.local 127.0.0.1 path=/webservicename


This should announce a proxy website within your network with name "Webservice" for the hostname foobar.local to be reached at http://127.0.0.1/webservicename