You'll need it to be local as per your PP address or you'll get flagged for being out of area quite likely.
Yes, PayPal hates proxies.
If your account is not Verified, don' try to log into PayPal via proxies.
Your account may be locked while waiting some proof from you.
Source : Personal experience.
Beny
if you have craeted ur paypal account in us and u've moved somewhere out of country, you can use your account normaly without anyprobem, u'll not get banned, i have asked them about this and you need only to set ur secret question, wish u understand))