Would it be in violation of the adsense policies to have ads shown on proxied or cached content (i.e, content cached from another site which has had extra processing done on it and added functionality/features, but with full credit given the original author/site and a backlink to the original page provided)?
Yes, it would violate AdSense Term of Service to put AdSense on proxied because it is considered the same as putting AdSense on a framed page (it is not your content). As of changing someone else's content and giving them credit, I think it does not violate the TOS but you would have to get the author's permission.