Though I've never tested it, from what I've read, it's only the real highend (read: expensive) access points that will act as a wireless bridges AND transmit to wireless clients.  Some low end units will act in bridge mode or client mode, but not both, meaning you have to buy several of them to actually extend your wireless network wirelessly (so to speak).  In addition, it's unlikely either of the aforementioned solutions would work with your existing AP, though I could be wrong.
The reason I resurect this dead thread is to suggest a solution that I've always wanted to try but never had the opportunity.  
As a little background, I've installed several wireless networks, (SOHO stuff, nothing commercial) the most recent at my sister's home over the holidays.  Her home is large, around 10k square feet with a lot of electronics and steel beam construction.  Hence, I knew one cheapo AP would not cover her entire house.  Forunately, her home is new construction and, as such, has dataports in every room which feed to a hub in the electronics closet which is uplinked to a linksys router which is, in turn, connected to a cable modem.  After reading literature on various "affordable" APs, I went with the D-Link AP1000 because it touted seemless roaming between access points and came with software that would manage mulitple APs.  These suckers cost a mere $129 a piece.  I bought two and put one at each end of the house, hardwired via the dataports to the central hub.  I then fired up the AP manager, located the APs and configured them to act as two cells within the same network.  Within minutes I was walking throughout the entire house with my sister's laptap, instanly and seemless switching between access points, indeed, the only indication was a milisecond of medium to low signal on the indicator before it went back to green as I passed between points.
Now, obviously I was benefited by the fact that the house was prewired with ethernet, as to my knowledge these very affordable APs would not have acted together wirlessly to extend range...ie, one in wireless bridge/client mode.  But, and here's my idea (which is, I guess really a question):  What's to stop someone from using a Home PNA connection between their router/hub and their access points via Home PNA bridges to acheive a setup similar to the one I set up at my sister's?  Granted, it would cost a little more as you have to buy a Home PNA bridge fort each phone jack, but it would still be cheaper than a highend AP setup.  For example, I've seen netgear bridges as low as $90 bucks.  At that price, I could buy two for $180, place one at my routher/hub and one at a phone jack on the otherside of my house.  Place an access point (or wireless router) at my hub  and another AP at the remote phone jack.  Configure the APs to act as two cells within the same network and now I have full coverage.  Total cost for extending my wireless network is roughly $300 ($180 for the bridges and $129.00 for the additional AP).
Ok folks.  Can anyone think of reason why this wouldn't work?  Seems like a relatively simple and affordable way to cover even a large house with a wireless network.  I may try this at another large house I'm setting up in a few weeks.