Tunnel connection channel Setup with proxy server

[Faysal Banna]

Hi all..
am trying to incorporate a tunnel from over a slow setup ........

/-------------------------/                                                                                        
/-------------------------------/
|     host1                  |=========//Tunnel ssh 
//====================|           Host2                   |
|     squid parent       |                               
                                                       | squid http_port 
3128     |
|     127.0.0.1:8080   
|                                                                                       
|           acl accept all        |
\-------------------------\                                                                                        
\-------------------------------\

Host1 configuration :
ssh -L 8080:127.0.0.1:3128 -C   -N -f  client at host2

The tunnel goes through the link and forwards port 8080 to 3128 from 
host1 to host2
main reason is that the actual link size is 2Mbit/s and i need to pass 
the data in compression to gain maximum http transparent proxied data 
transfer from Host2 to Host1.
It works fine as long as i don't have heavy load but when i connect 
Host1 to the local home network i start having some delay after a 
certain amount of time i believe when the clients establish sessions 
through squid which redirected to parents over the Tunnel session created .
i have separated the logs squid log shows normal connectivity but on the 
console after ssh established i got this message

channel 149: open failed: connect failed: Connection timed out
channel 111: open failed: connect failed: Connection timed out
channel 176: open failed: connect failed: Connection timed out
channel 193: open failed: connect failed: Connection timed out

and afterwards the connectivity degrades remarkably ....

anyone has got any clue for what this might  be.. thanks in advance :)

Regards
F.B.