The definition of sniping, as I understand it, in relation to eBay auctions and bidding is this:
"Waiting until the last second to place a bid which you hope will be higher than the proxy bid placed by the current high-bidder."
Based on that definition, the proxy system is essentially a sniping program which out-snipes the manual sniper, if the sniper's bid is not higher than the proxy bid. If your definition of sniping is different, than mine, I apologize for the confusion.
Proxy bidding works fine in this sense, and there doesn't seem to be any reason for eBay to offer a sniping program in addition to proxy bidding. I'm not familiar with AuctionSniper or how it works, but I imagine it is similar. You tell the program what to bid and when to bid, and then the program waits till the last second to place that bid for you.
Sure, if the current high-bidder hasn't bothered to effectively use the proxy system, but has been watching carefully, just in case a bidding war should develop, then you're going to have the upper hand. So as you mentioned before, anybody who uses the proxy system effectively makes sniping pointless.
In answer to Cordy's question, if there is a proxy bid for £1000 (placed by Frank S.) and the auction is currently sitting at £100, and another person (Mary B.) or snipe program comes along at the last second and bids £1000, then the win would belong to the first person to have bid £1000 (Frank S.). A kind of 'first-come, first-served' rule.
Of course if Mary B. had placed a snipe bid of £1000.01, then she would have been the winner, even though £0.01 is lower than the minimum allowable bid over £1000. The "minimum bid" rule only applies to the current visible high bid (in this case it was £100).