Yes, django-hosts works with Django Debug toolbar with the only limitation that the toolbar's middleware has to be come after django-hosts' HostsRequestMiddleware
middleware, e.g.:
MIDDLEWARE_CLASSES = (
'django_hosts.middleware.HostsRequestMiddleware',
# your other middlewares..
'debug_toolbar.middleware.DebugToolbarMiddleware',
'django_hosts.middleware.HostsResponseMiddleware',
)
Also, you have to install django-debug-toolbar 0.9.X or higher.