This is a “customer-to-customer” forum and, while they occasionally visit, DH staffers rarely post here. All we know is what the Terms of Service states and what little anecdotal information has been shared on these forums. Contacting DreamHost directly and posing the question is likely to provide an authoritative answer.
The ToS states, in paragraph 7 under “Material Products”:
“The customer agrees to make use of DreamHost Web Hosting servers primarily for the purpose of hosting a website, and associated email functions. Servers are shared with other customers, and as such IRC-related activities or severely CPU intensive CGI scripts (e.g. chat scripts, proxy scripts, scripts which have bugs causing them to not close properly after being run) are not encouraged. Any application that listens for inbound network connections (even if the application would otherwise be allowed) are not permitted. BitTorrent clients, IRC bots and bouncers (BNC) specifically may not be run on any DreamHost Web Hosting server. If your processes are adversely affecting server performance disproportionately DreamHost Web Hosting reserves the right to negotiate additional charges with the Customer and/or the discontinuation of the offending processes.”
(emphasis is mine)
There is some possibly relevant information on the DH Wiki Page on Persistent Processes:
"Firstly, DreamHost reserves the right to kill any user process on a shared server without warning or prior notification at the discretion of support or the administrators
This is not just done capriciously, however. This is generally done when a process is, in any way, adversely affecting the functionality of a shared server. The same policies do not apply to dedicated server customers. They can run whatever (LEGAL) processes they’d like. The owner must realize that they then accept responsibility for any negative impact this may have on their machine."
(emphasis is DreamHost’s)
There are many threads on these forum that discuss the use of proxy programs from which you can probably get a “feel” for how DreamHost handles them. My sense of it is that it depends almost entirely upon the server load generated by the proxy’s use.
Some users report no problems with a “private” (password protected, etc.) proxy script that is lightly used, while others have had their service curtailed for the operation of a heavily used proxy script that overburdens the shared server.
I have found no information that indicates DH outright prohibits the deployment of a proxy script, but, much like with the CPU resources and the number of concurrent connections allowed, they reserve the right to curtail its use if other users on the server are negatively impacted the load a proxy script may generate.
For an answer directly from DH, if you are a customer you can submit a support ticket and ask for clarification, and if you are not yet a customer, you can ask a “pre sales” question via the form at http://dreamhost.com/contact.cgi