I changed the replication job to use the Veeam server as proxy, but it still chose the VM proxy for the target and the results are almost identical. Now that I've done this test, I see something I didn't notice before: The Proxy VM that is being used does NOT have the datastore for the host's local storage mounted normally, and THIS is what takes the most time on this job. It takes 2-3 minutes for the hotadd process to mount the *datastore* to this VM (vs. just mounting a disk from a datastore that it already has mounted), which to me seems like a long time for that task. Once the datastore is attached, the drives for the replication target mount quickly.
I wonder if I can configure this VM to keep that datastore attached, even though it uses no resources on that datastore (other than when doing a replication job to that storage)? That would eliminate this delay, I think. Maybe I just need to make a small disk for this VM on that storage, to keep it attached continually