Just an update on my setup since it may help the OP. I initially went the ICS route on my laptop and while it worked, it was unwieldy because my laptop isn't usually close enough to my TV for it to be useful, plus it required me to plug a wire in every time I wanted to play online, it was on a different subnet than the rest of my network, etc. It worked but it wasn't anywhere near flexible enough.
Fast forward to last weekend. I bought a WRT54GL for $50 after rebate and flashed it to DD-WRT and set up a client bridge. I played Forza 2 for several hours last night and if any of the guys that were playing see this and I'm incorrect in saying so, but I think it worked extremely well as far as lag and such goes. The only downside of this setup is that DD-WRT v23 doesn't support WPA2 for bridging so I had to roll back my existing network to WPA and give up on WPA2 for now.