I run a local dictd server for speed reasons (and because the network admin blocks that port outbound, for some reason). In KDE3 I could set up kdict to hit the local server. But the dictionary plasmoid in KDE4 offers no such option, it only has 'timeout'. Can I dig into some config file and set this up? Or is this a config setting somewhere else?

No, you can't. But it's on the TODO list. Don't know the current state though.

A recent post on the plasma-devel list contemplated something like that, IIRC. May be even in time for 4.2.