origin server vs. proxy with full URL

Okay, this may be a dumb question....  (Not my first!)

HTTP/1.1 requires a server to accept an absoluteURI, like
http://www.business.com/foo/bar.

Question:  how does a server that acts both as a proxy and as an origin
server determine whether to service a request (as origin server) or
forward it (as a proxy)?  The requests look the same.

Possible answers:
1) That's an implementation issue.  Not germane.
2) The server examines the net_loc and decides whether the addressed
host corresponds to the origin server's name.  If not, the request is
a proxy request.  (The server must also check aliases, IP addresses, etc.)

Dave Kristol