Gordon, it took me a second to verify, because I had to find a proxy server to which I had access. But, I do not have this issue:
1) I opened Safari without a proxy server, and navigated to an HTTPS website successfully.
2) I changed my HTTPS to proxy service, and Safari asked me to keychain in to my proxy password. I was then able to successfully reach an HTTPS site using Safari and proxy.
3) I changed my HTTP to proxy service, and verified that I was indeed proxied by going to a site that makes use of the proxy server.
No issues on any count. Sorry.... ? Are you sure you didn't have any plugins installed before Safari was updated? They seem to have all kinds of strange effects through the upgrade. Do you have PithHelmet running?
BTW, doesn't your institution have EZProxy implemented for this kind of thing?