How to test if FTP Proxy is working?

My goal is to enable a colleague to use my machine via an FTP proxy. But first I want to make sure I've got the setup working locally before I attempt an outside connection.

Machine 1: Mac laptop running 10.6.6, IP 192.168.1.10, connected wirelessly
Machine 2: Mac mini running 10.6.4, IP 192.168.1.11, connected wirelessly

Step 1:
On Machine 1, run ssh -ND 8080 username@192.168.1.11; type in password and it seems fine

Step 2:
On Machine 1, in System Preferences | Network | Advanced | Proxies check FTP Proxy. Enter 192.168.1.11 and port 8080. Leave PASV mode turned on. Click ok, then click Apply.

Then I fire up YummyFTP, connect to a site and begin downloading a file. I have MenuMeters installed so I can see the large file coming down on Machine 1 via the network meter. On Machine 2, however, which also has MenuMeters installed, I see no similar activity.

This makes me think that what I've done isn't working — at all. That wouldn't surprise me, since I've never done this before and I'm not entirely sure that what I've done is going to pass through port 21 traffic.

Am I approaching this the correct way? Does anyone have any hints as to where to go from here?