This was never Orban’s or Hungary’s idea, it is something the previous presidency could not implement due to the lack of time and it’s now Hungary’s role to talk about it because the presidency is currently held by Hungary. This doesn’t change the fact that there are many EU members that are in support of the idea if implemented well. Anyhow, it’s not just for controlling citizents but legally keeping political opponents at check, which is even worse.
No, the whole point is that you expose your ip address so users in censored countries can connect to it. The proxy is between a user and a tor entry node.