From what I understand proxies use a similar challenge/response system for authentication as HTTP does, except with a 407 response code where HTTP returns a 401 response code.
However if a client is configured to use a proxy and the authentication is setup correctly, does it need* to do the challenge/response actions? Can it not just send the hash in the first request to the proxy and be authenticated?
*Need refers to needing to correct in terms of the RFC spec (which I am not sure which one covers proxy)