Excellent points and I warn my students about such things all semester. On the other hand, I don't think there's a better way to learn to protect yourself than knowing exactly how attackers go about hurting you.
Actually I was planning on doing precisely as you suggest: off-line, well-insulated, using throw-away VM's as targets, etc. I'm just looking for some example code to use as a headstart vs. beginning completely from scratch.
Cheers,
//ted






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