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 system; the 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.