Are there any Security benefits to using the current implementation of DNS proxy on the PAN? I have seen on the ver 6.0, a new feature called DNS sinkhole, but I don't think it will require the DNS proxy feature. Watchguard checks DNS headers and a couple of other criteria for DNS based attacks, but I don't see anything in PAN documentation that says the PAN Firewall does anything when used a DNS proxy.
You are correct, the dns proxy feature is a performance feature and not a security feature.
I think it depends on your policy. If you do not have a rule that dictates what the valid upstream resolvers are, the proxy could provide that same benefit. It could also help with split dns issues.
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