Rick, that Oldsmobubble diagram isn't even close to what an XJ proportioning valve looks like inside. I would suggest ignoring it, unless you're working on an Oldsmobubble.
Yes, it is possible to gut the OEM valve and retain the warning function. Remove the capped plug from the "nose" of the valve body. Take out the coil spring, remove the rubber seal (most folks call it an o-ring, but it's really shaped more like a cup) from the aft end of the plunger, push the plunger as far forward into the capped plug as it will go, and reassemble.
You will now have NO proportioning, which means full braking to the rear wheels at all times. For people who know how to drive (and for olde phartes like me, who grew up before proportioning valves were invented) this should not be a problem, but under certain conditions it may result in premature lockup of the rear wheels, which means "spin-out." I can deal with that, but I wouldn't want it in any vehicle my wife might ever drive.
Adding a manual, adjustable proportioning valve downstream should address that issue -- as long as it is correctly adjusted. Another work-around is to use a smaller diameter than stock rear wheel cylinder to reduce overall braking at the rear wheels.