Well, removing the ActionTec is not possible, since the HD TV set-top box needs the coax MoCa connection to pull an IP from the router. Since my Netgear routers don't support MoCa, the ActionTec has to stay.
I guess I didn't realize that VZ(w/FiOS) would actually bring Coax in to the house still, I have Ethernet via Copper and mine was installed well over 3 years ago. This being the case, then yes obviously you will still need the ActionTec. If you pop open the terminal outside of your house you may just find an open Ethernet port... just saying. Should you "end up" with Cat5 into your house, again my suggestion would be to kill all services on the Action other than letting it dish addresses out to the STB's(via Coax) and giving them a route to the Internet through your DDWRT box facing the Internet. The DDWRT Internet-edge router would also give you SSH, VPN, QoS, etc. options with its open firmware. I also just remembered the wireless on my Action couldn't authenticate the Xbox wireless adapter - palsy.
Second, my WDS routers are running in WPA-PSK mode, not sure where you get the idea that WDS only supports WEP. (Although, for my WNR2000 routers that I just bought, they are limited in just that way with the Netgear factory firmware. But DD-WRT isn't limited like that.)
I got the idea that WDS doesn't work with WPA because it often times doesn't, depending on your hard/firmware. I know there have been improvements in its development but if I remember correctly the lack of a standard keeps this "technology" at the mercy of its host's firmware.
As for your continual wireless problems; I would still point at the WDS to start, WPA "proficient" or not. Keep in mind that depending on your hardware and configuration when you send a packet from your wifi connected laptop, clearly it must send that packet to your AP. Well since this AP is "bridged" to the other AP, via wifi, it too must make a connection - to the other AP. We now have your laptop-associated AP having to accept packets in the air and turn around and send those back out the same way to the other AP.. this may induce a half-duplex type scenario. You may also see a problem if for instance your laptop has a poor wifi connection to the AP. It may force your AP's wireless bridged connection to be degraded down to the same speed at which your laptop is connected, thus causing yet another potential issue. Mix a few of these together and you might see fast wired speeds, and slow wireless.
Again, there are thousands of different vendors and firmware combinations you could have so it's hard to say. With the limited info I have, this is where I would start.
If you really want to fix your wireless, get a second laptop and leave only one AP running. Connect both laptops to it and run iperf between them so you can get an accurate assessment of your wireless throughput from where you use these machines in the "real world" on a single AP. From there try connecting one laptop to AP1 and one to AP2, then test throughput across your bridge. Once these are noted, maybe wire just one to the opposite AP LAN and test across that. You need to go, leg by leg, until you find where the throughput is taking its hit.
My suggestion would be either wire the two together if your single AP can't reach everywhere, or utilize the features of DDWRT and crank the broadcast power up until it can. Either way, WDS is far from an enterprise-grade method and should be used tentatively.
I also wanted to point out as I've seen it mentioned a lot, in this thread and others, that just because Windows says you are connected at 54Mb or even 300Mb, doesn't mean you're getting this speed. This is merely the current negotiated speed and rarely, if ever, would you ever even come close to hitting it. Many many factors have a say in your speed including signal strength, distance, how many clients connected, wireless interference, etc etc.