It did get me and I'm sure a lot of other people thinking. Would you mind answering this Quora question that I set up so I can sleep tonight?

http://www.quora.com/How-does-the-Tether-HTML5-app-work

I can't really go into much more detail than the first responder did without getting into trouble :)

Let's just say it's magic.

If that’s how it works it means that all my data is going through your proxy server. Is that correct? Is the connection encrypted?

If that were the case they could easily market a "lite" version that required a personal proxy (at half the cost?). Then to build off that, a corporate version for ~$200*(size) that could be used for your employees using your company proxy. I wonder if they could do mac auth or allow ldap calls for user verification. I could even see this as going so far as a lightweight VPN (if possible).

Yes we have proxy servers. And yes the connection is encrypted

What's to stop the carriers from simply blocking (or throttling) your proxy servers? Or conversely, simply detecting which customers connect to your proxy servers and automatically charging them for tethering (as they've already done in other cases).

Any plans for Linux clients?

If anything, simply releasing a "Here's what the client is doing so recreate it however possible..." might suffice.

(edited; previously sounded impolite)