There seems to be a problem in Blender in which linked proxy objects start to "lose data".
There is a simple way to test this behavior:
- Create a new empty blender scene
- Link an object to it (suzanne will do fine)
- Make the object a proxy
- Choose "make local" --> "all"
- Attempt to go to edit mode (won't work)
- Save the file and reload it (blender will give a console error with "lost data" and the proxy object disappears)
Here is a video of the problem:
This seems to happen with both 2.78 and 2.79
A smaller file: