Quick 500 pts - just verify my "thoughts" on Linksys routers

I'LL START BY SAYING, THIS MAY LOOK LIKE A LOT OF INFO, BUT IT'S FAIRLY SIMPLE AND I ONLY HAVE A FEW QUESTIONS.

I'm used to enterprise level equipment, so I have little to no experience on the Linksys stuff.

That said:

The president of the company has the following at his home (I've changed it to what I think it "should" be):

UPSTAIRS - WRV54G -->port #1----------------------------------------port#2
                    |   |                                                                          |
                    |   Vonage on port#2                                                  |
                    Computer on port #3                                                  |    
                                                                                                     |
                                                                                                     |
DOWNSTAIRS - WRT54G -->port #1-----------------port #1>>BEFSR41 dsl router
                            |                                                                               |
                            |                                                                               |
                         Computer on wireless                                                    Internet port--->dsl modem-->ISP


BEFSR41 CONFIG:

LAN IP = 192.168.1.1
External IP = 222.68.248.50
GW = 222.68.28.49
DNS = 202.96.209.133

DHCP = enabled (192.168.1.100 - 150)


downstairs WRT54G CONFIG:

IP = 192.168.1.2
GW = 192.168.1.1
DNS = 202.96.209.133

DHCP = disabled

upstairs WRV54G CONFIG:

IP = 192.168.1.3
GW = 192.168.1.1
DNS = 202.96.209.133

DHCP = disabled


My questions:

1)  should the WRT54G and WRV54G run from their Internet/WAN ports back to the BEFSR41 or does it matter?  My thoughts are that the LAN ports on them should work just fine since it basically becomes a switch at that point

2)  When DHCP on the BEFSR41 assigns an IP to a client it gives the client the DNS = 202.96.209.133.  Is that the way these work?  Why does it not assign 192.168.1.1 as the DNS or does it not house its own DNS server and forwarders?  Will local clients be able to see each other via name resolution?  Is it simply NETBIOS broadcasts at this point and no internal DNS resolution?


That's it...if you want to, you can confirm that the above network setup will work.  Previously he had the WRT54G using its Internet port to connect to the BEFSR41, and it was set with DHCP enabled.  So downstairs was handing out IP addresses to workstations with 192.168.1.2 as their gateway, so they could reach the internet, but couldn't see the upstairs computers.  So I'm disabling his downstairs DHCP service on the WRT54G and plugging it into the BEFSR41 via a LAN port.  This should make for a flat Layer 2 network back to the "main router" being the BEFSR41.

Thanks all.