H.264 proxy is a very compressed format intended for Avid cloud based editing, but can be used locally to store a LOT of footage compared to the usual offline proxy of DNxHD 36. That is up to you to decide based on amount of storage available and image quality you want to edit with.
When done, you will conform sequence back to camera originals and transcode at a higher quality for finishing, or do that in a third party application like Resolve. Or, if you have enough storage, just transcode to a finishing quality up front like DNxHD 175x. Not knowing what your originals sources are, it is difficult to recommend which way to go. DNxHD at 24fps is 75GB for every 1 hour.
Source frame rate versus project frame rate is dependent on whether the sources match the project rate or not. If they do, then just choose project. But of they don’t. like 30fps source in a 24fps project you can keep that rate. The wording is a little confusing when they do match and you are not warned whether they match or not. So it is up to you to manage.
For audio, click the transcode options, but do not compress the audio as you may want to use that in your final. Just have it match the source or project. It will either be 16 bit/48kHz or 24bit/48kHz.