I don't know about fedora as a proxy, but it works, I have used Redhat. I now use IPCop(
www.ipcop.org) for my firewall/proxy/DHCP/DynDNS/IDS with the addons for Advance Proxy, URL filter, Copfilter(Antivirus), Zernia(for VPNs). It has an option to be completly transparent for all hosts on the your network.