Yes, using connection strings are possible, but im talking about oauth provided by local provider. Oauth relays in some way in nip05, but not need to use your nip05, i mean, i can put my nsec in a bunker that have oauth and that will give me an address that i can use to require a valid signature from a provider, for example nym@oauth.provider but the nip05 defined in my kind0 could be different. 
What im thinking its in use some kind of local provider that you can use as nym@localhost to have a successful oauth flow, and the trickier part can be cors, but its not v dramatic  

 Nip05 is just a user friendly way to specify npub and bunker relay, if you find a nice way to provide that in local settings then it could work