I don't think you really want to be developing on production data, because crazy things do happen and you might lose or destroy your data by accident. Personally i like to have 3 places. 1st being my machine where i develop and test, 2nd a place where my test group can go on and test out new features etc... etc... 3rd the actual production server where the site/app gets published to when all of the testing is done. as far as cfcs and data go you only really need to worry about the logical path and the datasources on the CF servers.
for example:
server 1(dev):
physical path: c:\intepub\wwwroot\mycfcs\
logical path in cf admin: /flexServices
datasource name: exampledatasource
database server: SERVER1
database: MyTestData
server 2(prod):
physical path: c:\some\different\path\
logical path in cf admin: /flexServices (same as before)
datasource name: exampledatasource (same name )
database server: SERVER1
database: MySuperProductionDatabase ( have to keep the same structure )
So now you can access all of your data by just using the flexServices mapping. When you hit the Run button in FB it will go to your localhost and when you publish it; it will go to the production data. This way you dont have to risk losing or damaging anything.