[I think you meant "scales horizontally" in your first sentence.]
- Yes, typical load balancers are proxys.
- The load balancer will be a bottleneck if your load is network bound. Usually load is CPU bound so the load balancer distributes the CPU load, not the network load.
- No. load balancers don't need many resources since they don't hold or process much data. It should have as much network resources (bandwidth) as possible however.