What were the issues and hopes for the Proclamation of 1763?

The answer above covers it pretty well.  Here are a couple
of other points to consider. The French and Indian War lasted for nine years, and was
expensive to the tune of $15,000,000.  The King and the British people wanted it done
and over with.  So by defeating the French and negotiating the Treaty of Paris, that
took care of one enemy, but the tribes on the frontier who had fought alongside the
French had also been armed by them, and remained a
threat.

So the King wanted to buy them off with guarantees
of land, west of the Appalachians.  The Proclamation was that guarantee.  Most of the
people living there were poor, former indentured servants and late arrivals to the
colonies, who owned no slaves and worked small family farms, often living off the land
as frontiersmen.  These were Scots-Irish, and they had no love for the
King. 

So they ignored his order and settled west of the
line anyway, causing more tension with the native tribes there.