Hi,
Dreamweaver CS5's Live View features seems to be pretty cool. Is it possible to even live view the facebook applications inside DW that we develop, if yes, how to do it.
If not possible with DW's live view, then any other work around you may suggest please to test/view facebook applications on local server.
I am not familiar with DW, but from that presentation it seems like it is just a built-in browser with firebug features.
The problem with developing FB apps is that app pages should be reachable from facebook.com, plus facebook doesn't accept ip as a canvas url so you can't just point it to your machine.
Just register some free third level domain (http://www.dyndns.com/) pointing to you ip address, then create a new FB app for debugging with canvas url pointing to your domain.
It may be possible to run Facebook application locally on your server by using SSH Tunnels. (Routing requests over tunnel)
You can find an example with Ruby here: http://blog.evanweaver.com/articles/2007/07/13/developing-a-facebook-app-locally/