Techically, my understanding is that the data coming from the proxy will almost always be unencrypted meaning that packet inspection by the ISP is possible. As for the practicalities, what proxy server provider is going to allow an enourmous amount of bandwidth to pass through them for free? And if they end up charging then they'll become targets for the aurthorities. Not to mention you'll have a load of people using anonymous proxies with a poor privicy policy that will result in: a) data being mined by the operator, even if you only use it for torrent traffic etc. there's a possibility, traffic logs can be easily obtained by someone with a court order. Don't get me wrong, I'm far from an expert (as seen here!) as it's been a while since I even looked into such things. I'm sure another tech guy can clarify matters. And it's moot anyway, the government doesn't exactly have a great track-record in implementing legislature that has anything to do with the Internet, and their record of major goverment IT systems speaks for its self!