I control the box doing the decryption, so it is still my system. I can tell Squid which ciphers are appropriate and whether or not I want to validate the chai

I control the box doing the decryption, so it is still my system. I can tell Squid which ciphers are appropriate and whether or not I want to validate the chain or accept anything. All of those controls still exist. But yes, I would be concerned as you are if I were using a proprietary proxy like Bluecoat or Websense.