A warning for users of the Word 2010 Technical Preview and SharePoint. Following guidance from the Microsoft SharePoint Product Team Blog, do not use a "fake proxy" for any kind of workaround.
Specifically, if you encounter the issue where documents, including Word and Excel types, do not open when selected from a web browser, save the file locally before opening in Word 2010 or Excel 2010.
The fake proxy method, as also described in TechNet Forums, will allow you to open documents from a SharePoint site. However, the side effect is a very large security hole. As Lawrence said, "it will reduce the security for default Internet sites by interpreting them as intranet sites instead."
Update October 13th, 2009: I have been testing a modified version of the "fake proxy" method that I am relatively comfortable with. It doesn’t work when I connect to my work VPN, but I feel it is safe enough for me at other times. Microsoft Technet Forums User Rhett has this tip:
a better approach: by default IE is set to automatically detect what qualifies as the local intranet zone (LIZ) which seems to be the source of the proxy-workaround "problem". If you uncheck this option by: selecting Local intranet, clicking on Sites and clearing the checkbox "Automatically detect intranet network" public sites no longer show up in the LIZ. Then, to preserve any desired LIZ functionality, you can specify what networks, sites, etc should qualify as the LIZ either by checking the sub-checkboxes or by clicking the Advanced button.