T-Proxy is a program he released not along ago, I heard it was useless and crappy.
Anyways, a proxy is a port you use, sense everyone uses ports via the IP, MPGH have ten ports, connected to the Netherlands and China, six are open, allows users to quickly go in and out with little or no problems; however this allowed people to use DOS attacks more easily, that is how ********* was shut down because I was looking at the two ports that was open.
A proxy is a port that is located in the other place other then your own, it purely a server runned by a company or a website, as you go into that port, you're a different. Commonly proxy does not or will never change the password, just allowed you to mask the IP or your location. If you're living in China, commonly you'll try and force yourself out of the Chinese very tough and infamous Great Wall of the Internet "Ha'anai G'am" (Terrible Wall). The fact is, that proxy will be nice to use sometimes!
As for the hack being a keylogger, no, it's fine.