ZAP should work fine with Proxomitron.
One of the buggy symptoms I've experienced with ZAP 3.0
is an "automagic" change of settings (block cookies, for instance)
after a dirty shutdown. I haven't had to reinstall, nor have I been
frustrated to the point of reverting to v2.6x... yet.
Typical chain of events:
One of the ZAP components "hangs" ~~ won't allow Win98 to shutdown.
Call taskManager to see what's still running, and it just shows rundll32.
Force shutdown (yank plug to PC. Aaargh.)
Upon restart, Win98 runs scandisk. No errors reported.
When this happens, more often than not, one or more of the ZAP
security settings gets scrambled.