linked library and physics

Good evening,
I am glad I stumbled into wondering how to incorporate physics using a scene with linked characters early. I figured that the characters would need cloth simulation and soft bodies added to them after they are linked in and made proxies, but found there are no modifiers available for the proxies in the scene file.
I have searched quit a bit and only found a little information that mentions simulators do not work for linked characters, but the articles are several years old. Does anyone know the proper way to do that?
Please let me know.
Thanks,
Scooter

Edit: I found mention in two books that the way to deal with this is to complete the animation using linked characters, then make them local or make an appended copy to run simulations.
I would like to hear more if anyone has it.