Yep that's correct
you will need to install the web server (IIS) role on your server so you can host the .pac file and then on the ipads change the proxy settings to 'auto' and instead of typing the address of the proxy you put the address of the web server - http://webserver/proxy.pac for example
This is my .pac file
function FindProxyForURL(url, host)
{
// variable strings to return
var proxy_yes = "PROXY [color=#ff0000]Proxy address here[/color]";
var proxy_no = "DIRECT";
if (shExpMatch(url, "[color=#ff0000]Put your Printer IP here as an exception[/color]*")) { return proxy_no; }
// Proxy anything else
return proxy_yes;
}