Q. I was referring to your Squid transparent proxy configuration howto, and my question to you – can proxy authentication be done in transparent mode?

A. Short answer: noop, you cannot use Squid proxy authentication in transparent mode.

From official squid docs:

Authentication cannot be used in a transparently intercepting proxy as the client then thinks it is talking to an origin server and not the proxy. This is a limitation of bending the TCP/IP protocol to transparently intercepting port 80, not a limitation in Squid.