How often does that happen?

Docker Hub also has rate limits and outages, so yet another thing you want to cache if you promise customers "we'll install our software in your Kubernetes cluster in 15 minutes 99.95% of the time".

I don't see how any of those are build machines that are offline.

Build machines generally want to be 'online' so they can connect to the internet. They want to connect to the internet so they can access services hosted on the internet. Many of those services use Cloudflare, Akamari or Github. If any of those are down, those services are down. Now it's great that your build machine is online, but the packages it's trying to fetch won't be available because their CDN is offline.

Now if only you had a local caching proxy.

Sometimes I use an air gapped test lab. Setup of certain software and projects is a real pain. Sounds like this approach could help.

It's standard practice in many large companies.