as great as it is having blocking address in the host file it would efficient to block rather than redirect to local
by using 0.0.0.0 insted of 127.0.0.1
idk if this would improve anything or if its more problematic. but was a thought i had.
http://www.dslreports.com/forum/r24621780-hosts-127-0-0-1-vs-0-0-0-0