Many thanks, SC. I think I have now digested rung one of the ladder. I too would go for option 2 and will when it comes to de-wiring my own system, but B1 is somewhat peeved that the modem she paid $100 for 18 months ago and has never used is now worth probably $40 second hand. So she'll take a bit of convincing to assign it to the scrap heap, but as has been mentioned, that $40 if she can get it is about the difference between a wireless router and a modem/router anyway.
Thanks to all respondents, my knowledge base on wireless products has gone from 0.0 to 0.4 in two days.