It's possible to modify the setup to work with local development. Note: the python specific parts of the following directions can be skipped if you don't care about python images.
In deephaven-core:
./gradlew server-jetty-app:assemble py-server:assemble
In this repository:
cp <deephaven-core>/server/jetty-app/build/distributions/server-jetty-<version>.tar contexts/server-slim/
cp <deephaven-core>/server/jetty-app/build/distributions/server-jetty-<version>.tar contexts/server/
cp <deephaven-core>/py/server/build/wheel/deephaven_core-<version>-py3-none-any.whl contexts/server/
DEEPHAVEN_SOURCES=custom docker buildx bake -f server.hcl