Yes, it is a client to an AP and piping the Internet WAN traffic on into it.
I am, however, curious now. I have an additional USB LAN adapter that I thought I'd attempt to tie into the solution. What I had in mind is that when the Net goes down, I can use the wireless as a failover to one of our iPhones. It's an emergency situation provision, but it should be doable. Essentially I now have eth0 (WAN), eth1 (LAN (wireless)), and eth2 (USB LAN dongle). I'd like to use eth0 and eth2 for the WAN to LAN traffic and then the eth1 wireless as a failover option to connect on demand (i.e., when it goes down we just turn the sharing on and it connects to an iPhone SSID and away we go).
Any ideas on hacking that together? Doesn't seem that it should be terribly bad, but I'd like to know what packages might be most compatible with SME given any one else's playing or experience.
Man, I wish we could get the community built back up and more activity going on for SME Server. It's really a cleaner and simpler option than other solutions, in my opinion, like ClearOS.