Slow performance of FMS has nothing to do with distance . . .
That is not the reason way I post this, a intranet server will always be faster! the idea is to host files with the same speed as an intranet server.
A local installation is a lot faster than working over the WAN (~internet). Depends on bandwith, but on a local site, You can have GB network - and until now, that's been always faster...
If all users are local, this should be the fastest way.