You can use the whole 127/8, but only if you've added the address to your loopback interface.

Unix sockets skip all of tcp though, so I'd recommend them vs loopback, if possible. I hear Linux short circuits a lot of tcp for loopback, but there's probably still a bunch of connection state that doesn't need to be there. FreeBSD runs normal tcp on loopback, and you can get packet loss if you overrun the buffer, and congestion collapse and the whole nine yards. Great for validating the tcp stack, not the best for performance; better to skip it.