Routed IPs via PPPoE Interface IP on different subnet
I connect to my ISP via PPPoE, this gives me on ip address x.x.39.17.
I requested more IP address' and the ISP has routed me a subnet of x.x.38.249/29 via the PPPoE interface IP.
Great, setup with ProxyARP VIPs they work ok, they don't respond to ICMP unless you 1:1 NAT them but they seem to be working.
I have two concerns;
1. Have I set this up correctly? ProxyARP seems like a bit of a bodge, although it is working.
2. I seem to have lost connectivity on the original Interface IP - this could be a misconfiguration on the ISP end but I get weird things like I can ping some address' and not others, NAT doesn't work on the IP etc. etc.
After doing what you have done I figured out that I don't need to add a VIP for those addresses to work.
Because the packets are routed to the firewall, you only need a VIP configured if you're planning to use it for a service on the FW itself (openvpn etc.).
If you're using it for devices behind the firewall you can simply create 1:1 nat mappings and firewall rules and the traffic will flow as intended.