@aGeekHere:
Then it was said NOT use LAN_IP, use 127.0.0.1
No. No such thing has ever been said. You were told to make Squid listen on loopback in addition to whatever other interface in case you insist on messing with similar cache managers shit (because that's the only interface allowed by ACLs by default).
That's all there's to it.
@aGeekHere:
I think I am completely confused here.
Yeah. Definitely. Way over your head. Just leave the proxy stuff alone and move on.