MS Proxy 2.0 – Memory hog

We’re running a decent sized network (800 clients) through one proxy server. Internet performance is monitored at optimal. But the Proxy service is eating all the available memory on the server. The more physical RAM we add, the more it eats. I checked it this afternoon and there was only 1MB of 1.2 GB of memory left available. Is this a mis-report? Is my proxy misconfigured? Or is it normal for the proxy cache to eat as much memory as it has available to speed the proxy caching process?