Now the Armory Proxy option doesn't give an error message, but it duplicates the objects and makes the new one a proxy while keeping the old one. It also can't seem to keep the organization correct, so if objects were under another object, when I click "Make Proxy" the new proxy objects are just dumped into the scene with no structure and their position is no longer relative to what was supposed to be their parent. Which makes them appear in a different location from where they should be.
Proxy needs some more b28 updating.
Thanks to Zemmieon for discovering the issue!