This obviously doesn't offer the same guarantees (the entity running the server would see your requests to the virtual smartcard, so it could theoretically tell when you're paying someone and who you're paying - based on their public RSA key).
I don't understand what you mean. Which server are you talking about? Drazvan's system doesn't rely on a 3rd party server, it is a private key exchange between two people.
No, Eternity's right, we could theoretically look at our proxy to see the (encrypted) traffic between parties. We could see who's transferring to whom. However, the actual transaction is encrypted with a negotiated key (Diffie Hellman exchange), so we can't see that.
So yes, using our proxy makes things a little less private - but remember, you're coming from Bitcoin transactions where _everything is public_. In a Bitcoin transaction _everybody_ knows who you're paying, in a proxied OtherCoin transaction we could theoretically know who you're paying (but not to what address and how much). And in OtherCoin you have the option to just pay in person using NFC or QR codes or SMS (although you could say SMS goes through the wireless operator, so they would know that you're paying someone).
The proxy is there for convenience and is optional, it doesn't automatically push the data through us - there's a button that you need to press to upload the data to our proxy. It makes things easier for transactions with remote users if you choose to use it.