In this case, the "old" stuff you're talking about never really got "old". There's fundamentally not much of a difference between a proxy server and an edge overlay network fed with traffic redirection; in both cases, you're getting content from a middlebox.
Sure, conceptually. I didn't know of any big ISPs using proxies in the last 5-7 years, though, until the Comcast DPI fiasco happened.
I could well be out of the loop and not aware of any huge Squid or comparable installations, but I believed them to be archaic until recently because of how much faster commercial/service provider type WAN interfaces (DS-x, OC-x) were growing relative to consumer interfaces (DSL, cable). Of course FTTH (large bandwidth to each node) and wireless data (shared upstream + carrier optimizations for signal quality instead of bandwidth + physics) may turn this on it's head.
