Why is the proxy ip and ports not changed

Why is the proxy ip and ports not changed to 127.0.0.1
port 8118. I have sniffed out a http session using
ethereal and noticed that the proxy doesn't change the
IP's like other proxies on the net. I suppose it shouldn't
change the IP, but can I configure this proxy to keep the
port number as 8118. My trace shows the http session
is keeping port 80.
Thanks