Yes. To see an example, put up a /test/ directory on the website.
Create an .htaccess file in the test directory with the rule I gave you in it, but edit it to this:
RewriteRule ^([^.]+)\.asp$ /test/$1.php
Upload a file called test.php to the test directory.
Type example.com/test/test.asp into your browser.
You will see the results from test.php.
Switch back to the regular rule I gave you before going live.
I'm not sure about the development server question, because I use a real site on the same host as the site I'm working with most of the time for development, because I want to know how what I'm going to do actually functions at the host I'm using, so I code on a different site on the same server (or in a directory of the live site) rather than a 'development server'.
[edited by: jd01 at 5:58 pm (utc) on Oct. 3, 2009]