While you can get around this, you're much better off developing against a local webserver.
Flash operates with different security characteristics when running on the local filesystem vs. a network URL (e.g file:/// vs. http://), which means that it's easy to end up in a situation where you're surprised by security problems when you push to staging, instead of discovering and dealing with them while developing.
We've disabled Flash Player's ability to load from the local filesystem by default, so you would need to set the enableInsecureLocalWithFilesystem flag in mms.cfg (see pp.26 in the system administrator's guide ), and you will still run into additional restrictions on loading from the local filesystem by individual browsers, depending on the operating system and browser version.
So, long story short, it's all very messy, and it's better and easier to install something like WAMP/XAMP/MAMP/etc. and develop in an environment that more closely mirrors your hosted environment.