What standard are you refering to, exactly?

The 169.254.x.x addressing is part of the uPnP (Universal Plug and Play) standard.

However, even in that case, no standard would be broken since this would be an EXTRA feature, that could be disabled for standard compliance and compatibility reasons.

By what I understand, this type of feature is in the Mac OS, and is used quite a bit by Powerbook owners. The system detects what network it is on, then switches settings, including proxys and such. And manual changes are as easy as selecting the location from the Apple menu in OS X. I would so love this feature now on my x86 laptop. I currently use a batch file in the startup folder to attempt to copy a file from a network share. Based on what one completes, it then enacts certain settings like proxies and mapped drives. It's taken about 2 years now to get it to the level it is. I still have my wireless network set to the same settings as my work network due to not wanting to manually change settings.