I highly recommend using NGINX as the reverse proxy.
There are also some "ready do use" reverse proxys for node. Like redbird or http-proxy.
Now to your problem:
The issue I am noticing is, node-proxy is adding 5-10 times the time the downstream application is taking.
Do you mean the npm module "node-proxy" or is this the name of your program? The module node-proxy is definitely not necessary.
Using express as a reverse proxy is not easy. Do you piping the streams through some middleware or do you make new requests and return the result? (The second should slow down your app enormously)
You need a load balancer. Do you clustering your other API-endpoints?
Memory Leaks are definitly a posible reason for your problems. There are a lot of articles about this topic.