But what could anyone say?
Extensions can be malicious.
Extensions from Google's own stores are less likely to be malicious, especially if they have the verified author logo.
If they do not have that logo then they are not verified.
I don't see that you can expect any other answer in these forums.
It is a shame that we have to even think about security for extensions or for any 3rd part software, but this is the state of the internet as we have it.
That said, this Proxy Switchy does seem to be well received as it has it's own Google Code Project ongoing here http://switchy.samabox.com/ and a well established community of bug-reporters here; http://code.google.com/p/switchy/issues/list although little activity in recent times.
This is one of those, "compare all the variables and make your mind up on what you have" decisions.