I am developing a TCP Proxy to be put in front of a TCP service that should handle between 500 and 1000 active connections from the wild Internet.
The proxy is runn
In the scenario you describe, the local TCP connections are very unlikely to be a bottleneck. It will introduce some overhead, of course, but this should be negligible unless your CPU is already running hot.
At a guess, if your server's CPU usage is normally below 50% or so (with the proxy in place) it isn't worth worrying about minimizing the overhead associated with the local TCP connections.
If CPU usage is regularly above 80% you should probably be doing some profiling. I'd start by comparing the CPU load (or, better still, the performance, if you can measure it meaningfully) when the proxy is in place to when it isn't. Unless the proxy is doing some complicated processing, the overhead associated with the extra TCP connections is probably a significant fraction of the total overhead introduced by the proxy, so that should give you at least an order-of-magnitude estimate of how much you'd gain by using a more efficient form of IPC.