DNS Name vs MachineName / Localhost for VS Add Service Links

We are developing a Silverlight 3 application using WCF services on a back-end server. Some of these services will also be consumed by external clients. We will be using IIS to host these services.

I noticed that when using VS to add the Service Reference, it uses the machine name to resolve the WSDL location and schemaLocations in the XSD. If we specify localhost in the endpoint address in the web.config file, VS uses localhost. However, this interrupts the IIS hosting because IIS uses an address relative to where the service is hosted. So I was wondering what I can do to make the WSDL refer to the DNS name and not the machine name? Do I need to create WSDL and proxies outside of VS?

thank