channel 17: chan_shutdown_read: shutdown() failed for fd21 [i1 o16]:
Transport endpoint is not connected

This is one typical error that I get running the following configuration:

1. CLIENT: openssh-2.3.0p1-4 as the client ssh

2. SERVER SSH Version 1.2.26 [i686-unknown-linux], protocol version 1.5.
Standard version.  Does not use RSAREF.
Linux mark 2.2.17 #2 Fri Oct 20 02:26:15 PDT 2000 i686 unknown

3. SQUID: Squid Cache version 2.3.STABLE4

4. Connection forwarding (no compression) from local port 2080 to remote
port 2080 where SQUID listens on.

Here's a picture of the configuration:

Browser --> ssh client port 2080 (as proxy for browser) --> [Internet] -->
sshd  on some remote host (forwards connections to localhost 2080) -->
squid (listens on 2080) --> [grab the requested page]

The problem is that some of the connections work, others die with the error
above on the Squid side.

Please note that the current configuration works fine when using a
different ssh client than openssh shipped with RedHat 7.0. For example an
ssh compiled by myself works fine. Also,  a Windows client F-Secure SSH 1.1
works fine.

It looks like openssh has a problem with connection forwarding.

I am doing this in order to prevent HTTP request loggin by my ISP.