In our wisp we use pppoe-client on cpe devices (lhg,sxt,etc) which runs on top of the wireless interface wlan1. wlan1 is a client of the sector ap.
I have a situation where I want to set up the cpe to terminate the wireless connection,
then have another routerboard (hex poe) terminate the pppoe-client.
Only this is not working.

I know there is Layer 2 connectivity from the access point -> lhg5-> hex, because if I run dhcp client on hex I get an ip from the core router. In contrast, pppoe-client on hex does not do anything. No attempts to connect.

I have tried this using also a dynadish and a 750up, result is the same.

I'm thinking if this could be because I have "default forward" unticked on the access point? If so, is there something else I can do about it,?

I forgot to mention that when trying to get this to work I add wlan1 and ether1 on the cpe onto a bridge, so L2 connectivity is maintained through the other side of ether1, which is the hex router.

I'm really thinking it's the default forward setting on the access point, that is not allowing for true transparent l2 bridging.

I don't want to enable forwarding because it's a security risk. Can I try another way, perhaps a different type of tunnel from pppoe server to hex?

Eventually what I would like to accomplish is to have different ports on the hex router go to different apartments in the same building, providing separate pppoe connections via the same wireless CPE antenna.

have you try to change wireless mode in wireless receiver side device.