Is it a bug or a feature that the solaris iscsi initiator isn't able to connect to an iscsi target on the same machine, using either the 127.0.0.1 localhost address or the machine's own ip address?
Due to the recent surge of interest in porting ZFS to the Linux kernel (if you are in the mood to read dozens of messages, see this thread, the follow-up, plus this one and one more), I'd like to offer my view on things.