Answer
It's not strictly disallowed — some customers run it that way without issues, particularly when all users and printers are in a single location/country. The general best practice, though, is to install Print Agent on a server physically/network-close to the actual printers, especially when sites are geographically distributed (e.g. running a separate Print Agent for each region near that region's own printers) — this minimizes network latency and connectivity issues between the Print Agent and the physical printers it serves, which matters more the further apart your application server and print locations are.