Routing external address to loopback

Hello,

I am having a slight problem with a service that needs to reserve IP
addresses the host doesn't have at the time the service starts (It is
supposed to operate in backup mode).

I've been trying to actually use loopback addresses for the service and
then route the external address to the loopback address, but this
doesn't seem to work properly.

#!/bin/bash
iptables -t nat -A POSTROUTING --source 127.0.1.3 \
-j SNAT --to-source 10.120.1.3
iptables -t nat -A PREROUTING --destination 10.120.1.3 \
-j DNAT --to-destination 127.0.1.3
echo 1 > /proc/sys/net/ipv4/ip_forward
#End sample

If I do that I cannot even ping the external address (10.123.1.3) from
any other host; only from the host in quiestion itsself.
The FORWARD chain of the filter table is empty with an ACCEPT policy.

Did I forget something? Or is it generally impossible to route something
to loopback?

Thanks for help,
Björn