Configuring DNS on a machine connected temporary to the internet

[Marc van Woerkom]

My machine is connected to the internet via an ISDN modem, using kernel 
ppp and i4b.
If the link is up, it resolves symbolic names by asking some
nameserver.
If the link is down, it should just use /etc/hosts to
resolve "localhost" and the name of the second computer
attached to it by an ethernet link.

My problem is that if the ISDN link is down, even
a lookup of "localhost" doesn't work.

What do you recommend as configuration settings?

I seem to get stuck.

Regards,
Marc