Typically I develop my websites on trunk, then merge changes to a testing branch where they are put on a \'beta\' website, and then finally they are merged onto a live branc
For local testing we simply use a different app than for the server. In our case the Canvas-URL is set to localhost.local:8000.
You only have to make sure that when you use facebook connect that you type in localhost.local into the address field of the browser and not just localhost.
For testing a canvas or tab app it is faster if you use the 'open iframe in new tab' command of Firefox. This way the session and cookies from Facebook are preserved.