setting up a new wordpress site to replace and old html site

I want to replace an old html site with a new wordpress site. While constructing the new site, the webhost I am using suggest setting up the wordpress site at the same url as the old site, but setting my computer 'hosts' file to go to the ip address for the new site. They suggest this would be simpler than setting up a test site, than moving it whene it is ready. Is this a good way to do it?