No – the Project Manager not has ability for merge xRef-proxies.
The option “Merge as Proxy” not has any sense to xRef.
You can use the option “Merge as Proxy” for merging a 3d model as Vray or Mental Ray Proxy.
Every merged models as xRef with Project Manager are automatically set with “Merge Transforms” and “Merge Materials” on, even when those setting are off by default in xRef Object dialog box. Would be nice if PM could maintain the settings settled in the dialog.
With these settings always on, the usage of xRef get so limited!