Maybe. But, then I'd have to maintain the list. I used to do that, many years ago, for problem domains using a local Squid installation (my first company was based around Squid, so I already ran the local Squid 24/7), but, maintenance of the list was time-consuming. AdBlock Plus is set it and go (I occasionally have to disable it for videos of something, but it's so rare that I sometimes forget I even have it running).

I don't notice the performance or memory problems being discussed, so it's not a big deal for me. My lappy has 8GB of RAM and I've never run into memory problems. But, I guess my tablet (with only 2GB of RAM) or phone probably shouldn't run AdBlock Plus, even if it becomes available for Android. Somehow I never see auto-start audio ads on those devices. Maybe I should just figure out how to make Flash and audio behave the same on my lappy.

The issue with that, in Windows at least, is that host lookups become a lot slower with a larger hosts file; a local caching DNS server with a block list is possibly a better solution, and one I think is already adopted by some.

Another issue with this design is that Adblock extensions hide the blocked elements, using the hosts file leaves loads of 404's all over websites and it looks rather ugly.

Way back when, I wrote a simple web server that ran on localhost that served empty files for any .html, .js, etc. request and 1x1 pixel images for any .gif, .jpg, etc. request.

It worked pretty good. As a poster upthread noted, though, the big issue with this approach is maintaining the list.