It does include the proposals of sites that were created through Area 51. The only sites not included are Stack Overflow, Server Fault, and Super User, since they don't have proposals.
As far as I can tell, the dupes we're seeing on Area 51 that really belong in one of those existing sites (SOFU) are all from people who already know about them, but want a more niche-y site for their own interests. I doubt showing SOFU in the dupe results would deter those people.
If you're seeing some proposals that you think we should be discouraging / blocking at the creation phase, could you link to them? I agree there are lots of dupes, but usually when we say "this is a dupe of X" the response isn't, "Oh, I didn't know about X", it's "I know about X, but we really need our own site because...". For example, MMO Games, Everything XML, Videography, Programming Language ... all of those feature the proposal creator arguing against merging into an existing site / proposal which they already knew about.