Current setup: Modem -> Firewall(DHCP) -> Switch and Wireless Router |-> Computers
If I wanted to setup a Proxy Server in there, it would have to replace the Firewall correct?
The idea is so that ALL the systems have to pass through say SQUID in order to browse the internet. I was considering using CentOS for the Proxy Box which I guess would have to replace the firewall as well?
No, you would not have to replace your firewall with the proxy. Your proxy should complement your firewall's services, not replace it.
In order to ensure that all of your systems pass through the web proxy to browse the internet you would 1) configure the browser or operating system of each client to use the proxy. This is commonly done with either GPOs or the use of WPAD for Windows clients and 2) place a redirect rule on your firewall for traffic bound for either port 80 or port 443 that does not originate from the proxy to an internal web page that notifies users they must use the proxy for web access. This will ensure that non-proxied web traffic will be blocked and the user is notified in some manner.
Other than the potential use of DHCP's Option 252, for configuring clients I'm not sure what DHCP has to do with this.
