Seems as if I may have spoken too soon on the Lua option.
Now, it does check for the existence of the cookie and set the variable accordingly, but I am almost drawing the conclusion that proxy_no_cache and proxy_cache_bypass do not accept user defined variables as input as whether the extra content from the backend in my case seems to be a hit or miss affair and it seems the only time I can guarantee that the content is served from the back end is when I either purge the cache or run those two against a cookie.
Would appreciate some clarification.
Thanks