I can't get a lookup to work in a domain list. I'm trying this:

domainlist local_domains = @:localhost:${lookup pgsql{SELECT ...

Does the lookup return a colon separated list of domains? If not, you are using the wrong kind of lookup. The most common way of using a lookup in a domain list is something like this:

domainlist local_domains = @:localhost:pgsql;SELECT ...

Using that syntax, if the query succeeds, the domain is considered to be in the list. The value that is returned is not relevant.