If you do your development in an environment where you cannot setup your own email server and you don't want to use the production server, here is a solution for you. It's called "Dummy SMTP Server", and I found out about it on Matt Morse's blog (Click here to see Matt's Blog), the direct link to the utility is below. The best news is that it's FREE and the author has made the source code available to read/modify/learn from.
From the Dummy SMTP Server Web site:
Why might you need our free fully functional dummy SMTP server?
If you are developing or testing a web based application that generates email then you will want to be able to thoroughly test the email generating functionality without the fuss of setting up genuine email addresses as targets for the emails and you will certainly want to avoid sending test traffic through your personal or company SMTP server.
What our SMTP Server does.
Our dummy SMTP server runs as a console application. It listens for client processes on port 25 (as a default - but can be set by the user). When a client process indicates that it wants to "send" an email via the dummy SMTP server the the server initiates an SMTP session and stores the content of the email in a text file. The text file contains all relevant information about the email as well as the email text. This service will assist anyone testing programs or web sites that use SMTP to send emails.
Here's the direct download for the utility: Click here
To see my "How To" Video on Enabling incoming/outgoing email for SharePoint/MOSS 2007: Click here
~ Robert Shelton