Your options file should contain at least the following:
ipcp-accept-local ipcp-accept-remote proxyarp noauth |
The third line is very important. From the pppd man page:
proxyarp Add an entry to this system's ARP [Address Resolu- tion Protocol] table with the IP address of the peer and the Ethernet address of this system. This will have the effect of making the peer appear to other systems to be on the local ethernet. |