Well, I found a hack as a workaround - just added "localhost" to the domain, so now that is appended. It works, but it adds localhost to not only the 127.0.0.1 record, but also to my regular adaptor host record. I don't like this solution though...
$app_hostname = "myhost"
$app_domain = "usa.blah.com localhost"
hosts file:
127.0.0.1 myhost.usa.blah.com localhost localhost.localdomain localhost4 localhost4.localdomain myhost
10.10.229.190 myhost.usa.blah.com localhost myhost