We describe the development and testing of a novel beam stop for use in a rare kaon decay experiment at the Brookhaven AGS. The beam stop is located inside a dipole spectrometer magnet in close proximity to straw drift chambers and intercepts a high-intensity neutral hadron beam. The design process, involving both Monte Carlo simulations and beam tests of alternative beam-stop shielding arrangements, had the goal of minimizing the leakage of particles from the beam stop and the resulting hit rates in detectors, while preserving maximum acceptance for events of interest. The beam tests consisted of measurements of rates in drift chambers, scintilation counter hodoscopes, a gas threshold Cherenkov counter, and a lead glass array. Measurements were also made with a set of specialized detectors which were sensitive to low-energy neutrons, photons, and charged particles. Comparisons are made between these measurements and a detailed Monte Carlo simulation.