Good point, having local.domain.com or something similar point to localhost seems to be common practice. Actually my proposal would just simplify/automate this exact scenario. 
Personally I see some issues with this approach:
a) In order to get the example.com cert in the first place you need to put something online
b) modifying /etc/hosts is again machine specific and not really a portable solution
c) All of these steps require manual, human work
The idea behind this RFC / service idea is to automate these things for local projects that haven’t yet seen the light of day.