After changing our configuration to use 'localhost' as the domain-name, we still couldn't authenticate with Yahoo.
I think it's a general OAuth thing rather than a yahoo problem, but note that Google seems to offer a special consumer key & secret for people to develop
oauth apps locallyI also see there's a couple of things in the pipeline that may help in future - i.e. the
OAuth Discovery draft, and an extension proposal for "
unregistered consumers".
In the meantime, I ended up resorting to hacking our /etc/hosts file, flushing our DNS cache then accessing my local server using the real domain name "example.com" on port 80.
The only thing to worry about for anyone who cares to copy setup is that you'll need to verify the domain-name by uploading files to the real server.
(and for ye olde Mac Tiger users, after editting /etc/hosts you can use "$ lookupd -flushcache" in the Terminal to make Safari forget what the real server's IP address is.)