The short answer is no, it is not. This was a problem for me back in October (I even left a comment on the Microsoft Connect page that you linked to above).
My problem is that my company has an application that is used both within our intranet and externally for users outside our office. Since there are users outside our office, I had to publish the application on the Internet (i.e., on non-intranet).
When the corporation changed several parameters of the proxy server, the application violated the ability of our internal users to install and update the application, because their proxy server credentials are invalid every 5 minutes. They can download the application as long as the first open IE and cannot load any external web page - something that would seem to automatically re-verify their credentials.
The best solution I could find was to publish the application twice - first on an external site. Secondly, to a friendly place on the intranet that has not been verified through a proxy.
This solution, of course, is not elegant, but it worked for us.
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