Normally you don't assign a subnet mask for 65000+ IPs if you are in a home environment. It just doesn't make sense to do that for a bunch of reasons.
Yes, normally you don't. You don't need those many IPs. I certainly don't. But it shouldn't hurt, unless there are bugs somewhere. The only reason I can think of why it doesn't make sense to have /16 is, home grade routers might not be robust enough to handle it. In my case, it just happens to be there since a long time, and I have never had a single networked device alert me about an IP conflict, ever. I would like to pursue this more, but not as part of this thread.
As for your router settings, if you can't even trust your router to not do cross domain requests you should NOT be even using it. That's a noob error and they are a bag of fail if that can happen.
The router is not responsible for this. The browser is. Or, they were, in the past. Like I said earlier, this is an old setting.
Not to bash your whole network topology, but when you start doing non-standard stuff you increase the change of problems. Many people don't have a deep understanding of what happens when you go with a /16 netmask and how that can be potentially crippling on a network that is improperly configured.
Ok, time for full disclosure, I guess. I have another set of router/dialer, etc.. I keep switching between two different ISPs (because they both suck at times). The other router has all standard settings, DNS/Gateway/router IP at 192.168.1.1 or something. And this arp hopping happens in that setup too. Which makes me think that this arp hopping is not because of the non-standard gateway or netmask. And I switched to the current _weird_ configuration a couple of weeks back, and these multipath errors started happening only this morning (my time).
Other than that, I really don't know what to say. It's easy to help someone that has a fairly typical network and fairly typical settings. But as soon as you start going overly complex and trying to account for various theoretical scenarios the entire responsibility falls on that person to make it all work out. Sorry, but that's all the advice I can give.
Fair enough (more than that, actually)! I really appreciate the time you took to spend on my problem. Of course its my problem and the onus is on me to fix it. If there is a slight bit of contention here, all I'm claiming is, my network setup is not overly complex or weird. Its a little different, that's all :)
Thanks!
Saurav.