That's not necessary, if you run a local web server then this does not affect you. file:// is for access directly through the filesystem.

Currently blocked by Microsoft Defender SmartScreen, probably because the temporary (sub)domains were used as malware domains at some point.

Either way, exposing local files to an internet proxy just to open them in a browser is overkill. Lots of script runtimes come with their own lightweight HTTP servers nowadays. For example, I use Python's with "py -m http.server".