The short answer is that our ultimate goal is to enable environments that don't require SNMP, though in most heterogeneous environments the eradication of SNMP is not practical because it is the most common.
Specific answers to your questions:
1. What priviligies do the user account need on the managed server?
It does not need administrative privileges.
2. Do SIM use BOTH SNMP and WBEM?
hpSIM uses one, the other or both, depending on what a system is identified as having during Device Identification.
3. Can WBEM be used INSTEAD of SNMP when using SIM to monitor HP Proliant Servers running Windows? Would be nice to be able to skip the unsecure SNMP protocol.
The ProLiant Insight agents are today instrumented for HTTP access and SNMP, not WBEM. The information you get using WBEM (or, since we're talking about Windows, WMI) from a ProLiant is information from the operating system, not the Insight agents, so the depth and quality of information is not as good (e.g. no drive array information). Also, while hpSIM has the ability to receive alerts through WBEM, nothing is out there that sends alerts that way, so SNMP traps are still the best method.
SNMP has gotten an undeservedly bad reputation as being insecure because it is a clear text protocol, sending the community string and data without encryption. However, we have a "do no harm" approach in SNMP, meaning that our agents do not allow you to do anything worse than clearning a log or setting a threshold through SNMP. Using SNMP on a corporate network (note: not unprotected on the internet, which we don't advocate using our agents at all on) does not introduce any additional risk.
If you have employees that are sniffing your network intending to do harm, you have a much bigger problem than SNMP being used.