Choosing a local domain name

[RonnyQ]

Hi everyone,

I am currently using a small free email server called SOHO mail server. It works fine except that when a mail is not accepted by my ISP it stays in the queue without sending back an error message, blocking everything else that might be in the queue.
So I would like to change to Mercury but before I start the process just a little question :

I have 5 different mailboxes with my local ISP (xyz.com).
I would dowload all messages with MercuryD and dropping them in 5 different local mailboxes.
I do not need acces to Mercury from the Internet, only from my LAN.

Now the question :
Can I use the exact same domain name (xyz.com) for my LOCAL domain so that the 5 internal mailboxes can have exactly the same name as te ones with my ISP?

and if Yes,

Will messages sent to a non-local email address but in the same domain (my ISP's xyz.com) be forwarded by MercuryC to my ISP or will the sender (or postmaster) get an error message telling that that emailaddress doesnt exists?

Thanks for your time

Ronny