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It's unlikely that you will speed up your browsing this way. This depends on:
1) where you are
2) where your VPS is
3) where the sites that you typically visit are
Only in some rare cases going via the VPS (even with caching) will be faster than just going directly.
However if you plan to browse via the VPS anyway (e.g. to escape censorship in your home country), then yeah I would highly suggest to set up Squid on the VPS, the caching will at least somewhat compensate the added latency you might have due to the extra jump point between you and the destination websites.
No.
No, but if you set it up with a proper certificate (or at least one your machine trusts),
Firefox and Chrome can be configured to talk to it over HTTPS (It's probably still not in the proxy settings you have to use a PAC or on chrome use the switchy omega extension)
I'd prefer to use a full VPN when on public Wi-Fi but for a machine where that is not possible it comes in handy to at least have all my browsing traffic encrypted.