configure actionmailer to recieve email on localhost?

Rails doesn't care frome where you get your emails, you just have to forward them using script/runner YourMailer.receive(email) or more probably YourMailer.receive(STDIN.read).
Personally I use getmail, you can find some docs on the wiki.
The code you posted is for _sending_ emails.
Receiving with SMTP is quite hard, you need POP3/imap.

Have fun !
   ngw

If you're on osx, and trying to pop gmail (a narrow set of choices?), this reference may help: http://involution.com/2006/07/20/access-gmail-from-ruby-using-netpop3-and-stunnel/

cheers,
Jodi