[squid-users] hosts_file not working as expected

Hi,
I'm using squid 3.3.8 (sorry if this is not the latest; sticking with
a Debian-packaged Squid) as a
transparent proxy, using IPTables to pull users in. I'm also using
UFDBGuard, and everything so far has been working and scaling great.
My users connect through a VPN endpoint located on the box. I have
several such boxes.

There's some session management stuff for connected users that's
running on the box, and my users
should be able to reach that session management stuff regardless

Here's a config for squid:
http_port 13100
http_port 12600 intercept
acl Safe_ports port 80
acl tp_ipv6 dst ipv6
acl vpns src 44.0.0.0/8
acl CONNECT method CONNECT
http_access allow vpns
http_access deny all
coredump_dir /var/spool/squid3
visible_hostname futuredebian
tcp_outgoing_address REDACTED !to_ipv6
unique_hostname REDACTED
access_log daemon:/var/log/squid/6/access.log squid
cache_log /var/log/squid/6/cache.log
max_filedesc 8192
pid_filename /usr/local/etc/squid/0/squid.pid
hosts_file /etc/hosts
url_rewrite_program /usr/local/ufdbguard/bin/ufdbgclient -C -l
/var/ufdbguard/logs
url_rewrite_children 128 startup=6 concurrency=8

And /etc/hosts:
127.0.0.1 localhost REDACTED
REDACTED cdn.REDACTED.com

So, the cdn URL resolves, externally, to an address that's not serving
the content, so the client browsers will actually send out the request
over the VPN, where squid will catch it. Ideally, squid would then
look in /etc/hosts to see that the CDN is running on that box and send
it over to the local webserver which is configured to receive it
(tested this with telnet; local webserver is happy). Unfortunately,
squid seems to be ignoring /etc/hosts and actually trying to go out
and talk to that destination address; squid gives the user:

"Connection to REDACTED failed".

Does the 3.3.8 hosts_file directive not work? Or perhaps not work for
intercept type proxies?

I am open to other ways of configuring squid to force all traffic
destined to the "cdn" to be pointed at a local webserver running on
the box.

-- 
Every dogma has its day -- DrWho