This all VM thing is fine and dandy if you want to have an accessible mirror of your staging machine and reduce unnecessary stages. Although that in itself looks fishy - if developers want to stage something just to see if it works, then something is seriously wrong with your process or developers.

I'm amazed at the level of sophistication in this setup - using virtual machines and TCP proxies that do text replaces seems too much. They could have just built the configurability in the damn application. I have a .NET app that normally gets deployed on three servers and uses various remote resources like Amazon SQS queues, but I easily built a configuration abstraction similar to Rails' environments that lets me deploy on a single machine and even test locally with a debugger attached.

My point is that this problem looks as if it got solved at the wrong level of abstraction. Which, obviously, made it unnecessarily hard and complex. If I had to tackle it, I'd make sure developers do the right thing and try to make the app configurable enough first.