The open source project Eucalyptus implements the Amazon API on top of your own hardware. This makes it possible to implement your own โpersonal cloudโ, but it does not give you local modeling of the EC2 cloud (although perhaps you could fine-tune it as such).
Such a "local testing" environment will be tough, since the EC2 instance is an entire virtual machine and, as such, will consume a lot of resources on your development machine (not to mention whether they need to emulate several of them). EC2 is fundamentally different from App Engine - with EC2 you rent virtual machines, and you can test them as easily as on a local virtual machine.
Nick johnson
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