This is the fourth custom theme I’ve made for a Tumblr site and I finally have a good work flow. Since the CSS and HTML ultimately end up in the same file, and since images need to be hosted remotely I struggled in the past trying to develop without constantly changing references to test locally, then on Tumblr, and back again.
This time I pulled the CSS out into a separate file locally and kept all my images locally as well. Basically I set it up as I would any other site. I created a test Tumblr site under my account and posted one of each type of post. Then, I grabbed the source code of the test site and created a testing.html file locally where I could see my CSS in action. Once I felt like the theme was almost there I posted my images elsewhere and pointed all the image URLs to the new locations. Then I merged the HTML and CSS applied it to my test site.
I still ended up doing a fair amount of real time tweaking near the end that required edting both local and published code, but by comparison the flow was much more efficent than it has been in the past.