There is nothing wrong with the proxy technology and some ISPs are using that to speed up transfers of popular contents or to block undesirable contents. However, if you run a proxy site, you know you are giving anonymous access to anyone who uses your site. The thing about proxy site is that it mask your users' IP address and on the sites, it will show your IP or your web host IP as the user. Although with good intend, proxy sites allows people who normally may not access certain sites because of some blocked because of down network pipe to access certain sites. Like the time when the earthquake off the shore of Taiwan causes the major undersea cables to break and using an Australian proxy I was able to access my US sites which I would not have done so without it. However, proxy sites do not ask for users' identification and may be an open invitation for people to access illegal contents or to post them. It may be possible that a phisher may use your proxy to set up a phishing site and send out phishing contents. Doing so, if any trace back may just lead back to just your proxy as the sender of the contents and put you or your web host in trouble. For that, many web hosts would not allow the hosting of proxy sites.
Wow, well said. I'm giving you a rep for that. To MakeThatDollar, Just be careful about hosting and don't put adsense on the proxies page.
Well, the think about Proxy Sites is that you do not know what sites your users would visit through your proxy. If excessive number of Adsense determined illegal contents are brought up such as porn sites, racist sites and so on, it may cause your adsense account to be terminated.