I have configured pppoe server on MT 2.9 with IP pool 10.1.1.5-10.1.1.254. PPPoE works fine with authentication using FreeRadius and MySQL.
My problem is that anyone can put any IP address from above pool and Gateway as 10.1.1.1 (ip address of local interface), DNS settings and he can surf the net without authentication.
Why this is happening ? This way my entire bandwidth will be used by bad users.
You should NOT add any ip address to the interface the PPPoE server is running on. Just use this address (10.1.1.1 in your case) as the local address in the profile.
This way no-one can use your service without successfully authenticating via PPPoE.