I chose options 1 & 2 and so far it’s working out. I tried Tomato (Shibby) and the Linksys E4200 first and established a Wireless Ethernet Bridge for a full week without any significant issues. The connection was stable and it didn’t degrade to 2 Mbps like with the ASUS firmware in “Repeater” mode. I experienced hiccups but I blame the noise/interference and location of the access point.
Now I’m flashed the ASUS RT-N16 with Tomato (Shibby) established a Wireless Ethernet Bridge with it and transformed the E4200 as an access point. It’s only been a day so I cannot draw any conclusions yet.
I’ve learned that the E4200 and its lack of external antennas really hurts its range and performance. I’m sitting less than 5 feet from it and the Wi-Fi Signal application my mic is only displaying 73% signal strength. If I stand up, the signal strength jumps to 86%. I should really buy new hardware but I find it difficult to justify the cost if all of this just works.