Editing Hosts File to Redirect URL to different IP Address

All additional entries to the HOSTS file must be above the:

fe80::1%lo0

Make sure there is at least one line break after the last entry. Like so:

127.0.0.1 LLL.localhost
127.0.0.1 LLL.localhost
#

Although you probably can't tell, there is another line following the # symbol. One more thing to mention, using Space instead of Tab between 127.0.0.1 and localhost might help too.

In agreement with the original poster, in this answer I put together the comments above that describe the troubleshooting steps that helped solve the issue.

1. Realize that PeerGuardian uses a KEXT.

   As strangelydim commented, PeerGuardian (an open source privacy oriented firewall software) uses a kernel extension (KEXT). The KEXT is used to block connections to "dangerous" servers specified in so-called blocklists.

2. Find out whether the KEXT was the culprit.

   The original poster booted his Mac into Safe Mode by pressing Shift during startup (http://support.apple.com/kb/HT1533).

   Safe Mode does a lot of things (http://support.apple.com/kb/HT1564), among them it loads only required kernel extensions, so PeerGuardian's KEXT wouldn't be loaded.

   The original poster could successfully connect to www.lubuntu.net, so the KEXT was the offender.

3. Disable the KEXT.

   The first try was to move the KEXT from /Library/Application Support/PeerGuardian to /tmp and reboot. That didn't help. The original poster then deleted the KEXT. I also asked him to check in System Preferences>Users & Groups>Login Items whether PeerGuardian was listed and remove it.

   After a reboot he could sucessfully connect to www.lubuntu.net.

So the bottom line is that, unfortunately, some programs cannot be uninstalled by simply dragging them to the Trash.