The REMOTE system does not need a new X server (as always, the REMOTE system doesn't need any X server running).
The application you want to run does not need to be linked with any special version of X, or any special libraries; I regularly use commercial X11R5 apps over LBX with no trouble.
You do not need root or other privileged access on the REMOTE
lbxproxy process runs under your normal access
permissions. Further, you can run it right from your home directory: it
does not have to be installed anywhere.