Essentially, a transparent proxy server is a combination of a normal proxy server, and some NAT rules on a router somewhere.

A normal connection outgoing to port 80, has its destination address NAT'd by the router, to turn up on the port which a "normal" proxy server listens on.

The proxy server then behaves slightly differently because it has to realise the connection has been NAT'd, and it impersonates the destination web server while proxying the request.

So it's "transparent" because as far as the client (web browser) is concerned, the proxy isn't even there. The client just sees itself connecting to the server directly, but the NAT ensures that this doesn't happen.

*loads* of ISPs use them. It makes good sense too, as if they can cache 10% of web traffic, they can save themselves a lot of money.

Persuading novice users of different OS, browsers, machines etc to use a normal proxy server would be a support nightmare.

Slarty