You have described it correctly, Terminator.
Only one minor correction: My uplink antenna doesn't point directly to the ISP, it points to another repeater, and it's that repeater which points back to the ISP. He's got half a dozen of these little 802.11b repeater systems dotting the countryside around here. It's a nifty little system for those of us in Cow Country who can't get DSL or cable-modem.
Yes, he did build his own routers. They are little motherboard/CPU/Flash dealies running an embedded version of Debian which he has customized heavily (sound familiar?
). The reason he did so was so that he can have complete control over them and customize them for various things. For example, he can lock down a router so that only certain MAC addresses can connect to it. This helps with security and prevents anyone from being a freeloader on the signal. He can also throttle the bandwidth of any given client MAC address so that he can sell different amounts of bandwidth for different prices. While he's at it, these routers can do NAT and firewall stuff, eliminating the need for a dedicated router/firewall at the client end. My home-office LAN is literally plugged straight into his custom wireless router, and I get my DHCP addresses from it.
As far as the wireless transceivers, this is what surprised me the most. They are just little Lucent and Orinoco PCMCIA cards. These are the exact same cards you can get for your laptop. The only trick is that these cards have an extra jack for an external antenna. That jack is what plug into the roof antenna (via a pigtail adapter conneced to a MASSIVE low-loss cable running to the antenna).
I know essentially nothing about the antennas. I don't know where he gets them or who makes them. There are two kinds of antennas: 1) the directional ones which point back upstream to a relay or to the ISP. These small mesh antennas, smaller than a DirecTV Satellite antenna. 2) Omnidirectional antennas which are meant to be relay stations, sending their signal in all directions. These look like a short piece of PVC tubing.
I don't know whether or not this sort of thing can be done with off-the shelf wireless routers or not. I guess that it could be done, but it might not be as secure as Scott's custom system.
One thing I do know is that grounding is a major issue for these systems. If you don't ground the antennas properly, it will build up static electricity and fry your router.