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Sounds pretty cool, but I use the firefox adblock plugin
Using both would be the wisest. adblock for firefox is incredibly useful, but the host file will work perfectly in conjunction with it. the host file will basically deny that content from even loading (be it a pop up, pop under, iframe src, ad baners) and thus only show a 404 IF it's HTML based IIRC. So it's less processor stress on firefox, less bandwidth wasted all together (since not only does it NOT show those things blocked on hosts, but doesn't even download them), and thus a happy time :)