lo0 is the network interface device, 127.0.0.1 is one IP address assigned to that device. On many systems, the loopback interface uses 127.0.0.0/8, so 127.123.45.67 is just as valid an IP address for that device.
AFAIK on Solaris the loopback interface driver does not offer the hooks necessary for sniffing traffic. So you won't be able to do this with any tool (unless you rewrite the driver, it's Open Source now for some definitions of OS).
Alternatively, you could use truss on the processes that are communicating over loopback. Or if it's Solaris 10 there may be a way to do this with dtrace.
You'll have to read your system's man-pages for specifics, I don't have a Solaris system handy. In general you'd
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