You shouldn't be having trouble developing against your own machine. What error are you getting?
An OpenID provider will ask you to give your site (in this case http://localhost:8000 or similar) access to your identity. If you click ok then it will redirect you that url. I've never had problems with livejournal and I expect that myopenid.com will work too.
If you're having problems developing locally I suggest that the problem you're having is unrelated to the url being localhost, but something else. Without an error message or problem description it's impossible to say more.
Edit: It turns out that Yahoo do things differently to other OpenID providers that I've come across and disallow redirections to ip address, sites without a correct tld in their domain name and those that run on ports other than 80 or 443. See here for a post from a Yahoo developer on this subject. This post offers a work around, but I would suggest that for development myopenid.com would be far simpler than working around Yahoo, or running your own provider.