Really it would depend on what your specific needs are. As I stated above the Proxy is required for "rotating passwords" (which includes "verifying passwords" as well) on local accounts.
That being said, if you are NOT interested in "rotating or verifying passwords", you could use a Generic type target application instead which would only allow you to store a static Target Account in the password vault and use it for Auto Logins or Viewing.
-Christian Lutz