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Sending mail in Exchange Server 2003

I am setting up a "test" network/domain, to mirror our "live" servers.  The test Exchange 2003 server I have setup won't send an email to my yahoo account, but it does send email to our "live" exchange server.  Now, the "dummy" domain and email addresses I have setup on my test domain are not real addresses, so I am guessing that is the problem.  Does Yahoo do some sort of dns lookup to see whether or not the sender domain is valid?  If so, why doesn't my real, or "live" exchange server do the same thing?  Basically, I am just trying to make sure my test server can send email properly, but obviously I am missing something.

Thanks
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Thanks to all for the great information.