That what I have in mind for my calendar as well. I wrote it all from scratch so I could format it exactly how I wanted. I got the part that generates the calendar working... then just kind of put it aside. Haha. Eventually I'm going to turn it into a full blown scheduling system, with user accounts, reminders, event spanning, etc.
To answer your question about developing on your computer, I would say just install a webserver (http://apache.org), and then install PHP to work with it. It's fairly easy to setup... and if you use apache (as opposed to IIS), it doesn't take up hardly any system resources.