From the LIDO entry for INN:
“In the area around INNSBRUCK it may happen that different values of VIS exist in various directions mainly caused by a haze or mist layer over the city. If such situations are observed and the ground VIS is 8km or less, an additional reference in plain language to the INNSBRUCK MET REPORT is made or ATC will refer to. This plain-language-appendix refers especially to an existing haze layer and as far as
possible to the estimated VIS above this haze layer.”
So yes; I suppose “as far as possible” means they will use Pireps and other local procedures (observations from the mountains?)
In the mid-1990s I used to fly 737-400s to Innsbruck most winter weekends. I don’t remember having to worry too much about in-flight visibility. Provided that the Met reports were above minima, we would make an approach and land. I remember that the in-flight vis had to be assessed at certain points, inasmuch as one had to be able to see a church spire or some such at a certain DME. My memories are that the visibility was normally very good. The only times I diverted were from holding altitude because the weather was clearly below limits and there was no point in attempting an approach.
This was getting on for 25 years ago, so maybe someone with more recent experience can provide more information?