Z reports can be extracted from each point of sale, but is it OK for all the Z reports to be run from one of the points of sale?

Yes, that is OK. Under Section 2-8-1 of the Cash Register System Regulation, the cash system for each point of sale must be able to product X reports, Z reports, sales receipts and return receipts.  However, it is permissible to produce all Z reports from one point of sale.