Is it possible to install and run ejabberd on localhost (with localhost as domain) and connect to this from a client to experiment with client functionality?
The reason that I want to do this is to be able to play around with extensions that are not available on for example jabber.org.
sure its possible,and really easy too. You can use any xmpp server for that like openfire or ejabberd. And Thse servers have user friendly web interface for administration.