I impelmented this for the studio i work.
1. build a copy of all meshes
2. collapse stack and attack to a new,empty geometry. A multisubmaterial is generated automatic (meshop.attach emptyEditpoly copyOftmpNode attachMat:#MatToID)
3. export the new object to get the VrayProxy.
We take this a little further. Your script works with groups and build a proxy for the upper group and all its content.
I build a customattribute holding a preview rendering and two nice buttons.
First button resets the material of the Proxy to its exported multisub.
The second one merges the source group where the proxy was generated from.
About the performance during attaching. There are some tweaks to accelerate this. (such as start with emty poly and collapsestack before attaching)