You could remove the captcha validation to allow registration without it on your localhost. Most likely it isn't working on your localhost because you don't have the GD Library enabled in your php.ini file. That might allow you to view the Captcha.
Another option would be to add the user to your database manually through phpMyAdmin so you could test the login page.
You could also just create a sub-folder on your live server like /beta and upload all of your files there so you can test and make sure they all work before going live so you wouldn't have to worry about using a localhost at all.