Listing hosts in /etc/X0.hosts allows these hosts to talk to the X server running on display 0 without further authorization. This seems to work for any host I add to that file except the host the X server is actually running on. I tried adding "localhost", "127.0.0.1", "LOCAL", my hostname, my IP addr and my FQHN. None of them allow access to processes running on the X server machine. This type of access is needed for running Java Servlets, as the AWT routines need to talk to an X server.
How are you initiating these programs? I have no trouble starting programs on the local host.
Closing bug due to lack of response in reasonable amount of time.