Hi,
If suppose I use AS to bid for an item which is currently at £80, and the maximum bid i put as £101.00. At the same time a proxy bidder say 'X' puts a maximum through ebay as £105.00, will I still win the auction bcos AS puts the highest bid at the last few seconds ? Or does ebay recognizes the proxy bidders higher max. bid and puts that at the last second for X to win?

Bids from AS work the same way a manually entered bid works. It's not the last bid that wins, it's the highest bid.

In the example you gave, you would lose the auction to the higher bid.