Double J,
I realize I'm late on the day with the thread, but understand the IPs that enter that router, are in fact routable. This is assuming that you have static routes or a routing protocol enables on your network.
I personally run a 2511 outer router, in nat outside ether0
serial back to back with 2507. Thsi provides my ethernet segment internally, i use 192.168.1.96 /28.
I have on that subnet my workstation and all of my other routers us OSPF in a BROADCAST network. 16 Port HUB router, 16 node address space. On that network is a 2522 that has 2 2501s serial to S0 and S2. S1 is a redundant line for one 2501. The 2501s are connected back to back Ethernet. This creates my loop.
This lab is used for people I work with and your question came up. Refence topology in the BSCI Cisco Press book. Chapter 1
On the ethernet subnet at the bottom if you will, between the 2501s we used 192.168.1.64 /26. 32 clients as we have switches on those interfaces. That segment receives it's IP addresses from my 2507 all the way at the top in an address pool called DOT64
It also controls the broadcase network with a pool called DOT96
Both of these address pools arrive on the router at E0 through the hub plate. When a client requests a MAC Broadcast for a DHCP server, if it's not local you have ot use:
conf t
int X
ip helper-address
dhcp-server interface ip address
When that packet arrives on the interface of the router with helper-address enabled, it will be converted to
ip directed-broadcast traffic.
In my network this packets leaves the 2501 and goes to the 2522, then out ethernet 0 to the 2507 interface or 192.168.1.97
The source address for that request. The DHCP server will only reply an address if it contains a scope that encapsulates the original subnet....
This can be tested by taking a client from one subnet, drawing an address, then, while debuggin ip dhcp events on the dhcp server, release that ip to the server, then plug the ethernet cable into the segment of the other scope,
The router will respond with a console message that the requested IP is not on that subnet, and will make an offer for the correct subnet.
Basically addressing is controlled by "where" the request came from...
I know this is lengthy, so I've put my show running-config statement from my dhcp router (2507) 16 Port HUB 1Ethernet and 2 Serials....
again, sorry for the length