I have one on my pc, that automatically switches proxy depending on the IP of my primary network adapter. Thus, the choice of the correct proxy is somewhat automatic. The file I use is similar to this one:

function FindProxyForURL(url,host) {
if(isPlainHostName(host))
return "DIRECT";
else if(isInNet(host,"127.0.0.0","255.0.0.0"))
return "DIRECT";
else if(isInNet(host,"192.168.0.0","255.255.0.0")) // VMWare & Wi-Fi
return "DIRECT";
else if(isInNet(myIpAddress(),"172.16.0.0","255.255.0.0")) // BF
return "PROXY 172.16.0.170:8080;DIRECT";
else
return "DIRECT";
}


I even found that you do not need an http service (i.e. a local IIS or Apache) to give back the .pac file: you can simply use a URL syntax with the “file:” prefix, like:
file:///drive/path/proxy.pac

This is the configuration for Firefox, I think that with IE you must use only two slashes after the “file:”. I think that if you have any http service on your pc, it is better to specify an “http://localhost/…” path to reach your proxy.pac file, because some other tools that use the IE proxy can get confused by the “file:” syntax…