its actually a lot rarer now for a gelding to be proud cut than it was 20 years ago, simply because vets are much more careful. Yet still, whenever a gelding gets puffed up or excited about a mare, people usually jump on the proud cut wagon, when its actually really not that common of an affliction anymore. Sometimes its just bad behavior. Sometimes its a natural higher level of hormones.
For them to be a proud cut gelding, usually the surgery isn't completed properly, and they have too much testosterone left over in their system (I'm told too that like 2% of the horse population actually has a 3rd testicle, so that could be a complication as well). A true proud cut gelding can be a complete menace, and is generally able to actually mount a mare and penetrate, because of the really high levels of testosterone. Some of them can be quite rank-because realistically, they have all the hormones and feelings of a stallion, but they are a gelding. (I remember a breeder that used to use one as a teaser stallion, which I think was pretty cruel, and he just got so frustrated)
Now, what you have to understand is that gelding a horse does NOT remove all testosterone-only most of it. There are more glands in a male that produce testosterone, and testosterone is what tells a male to act like a male. Some horses have an excess of testosterone - my 3 year old, for example. I was there at his gelding so I KNOW it went right, but even the vet commented that this horse appeared to have excess testosterone and was extremely...err...large in that area ;) (despite the fact that he was very well mannered and never caused me any trouble in that area) Even now, a year after gelding, he still gets excited and puffs himself up with importance if he sees a new mare.
If you're really concerned, you can always invest in a hormone blood test-its a really cheap way of seeing if his hormone levels are out of whack and causing him