Local Domain Forwarding
Is it possible to configure DNS Resolver to not forward queries for hosts with a local domain (or specific specified domain), even if the host is not found locally?
Try setting a domain forward for the domain to 127.0.0.1. I don't think this creates any kind of loop or anything. And host overrides seem to be processed first so it all just works.
If the local-zone configuration option works the way it sounds like it should, then this should be a more direct approach by using the unbound configuration options.