I've run into the same situation after upgrading from 5.1 to 5.5 and running mysql_upgrade. The upgrade utility apparently creates "GRANT PROXY ON ''@'' TO 'root'@'localhost' WITH GRANT OPTION;" automatically.
I've run into the same situation after upgrading from 5.1 to 5.5 and running mysql_upgrade. The upgrade utility apparently creates "GRANT PROXY ON ''@'' TO 'root'@'localhost' WITH GRANT OPTION;" automatically.