the hardware needs to be bought in this country.

he doesn't have to watch what you are watching - you can plug your aerial into the slingbox and your tv/freeview or whatever. if an aerial is connected to the slingbox, he can control it to watch any freeview channel using it's built in freeview receiver and whatever you are watching is not affected

if you only have one sky box in the house with no aerial, then yes you both have to watch the same thing which is not great.

sorry i can't help about the proxy thing, but would be interested in finding out also, as i have some friends in germany that would like to be able to watch english tv (technically it's breaking the terms of the broadcasters licence )