BT Business Broadband with Cisco 877 and first ping is dropped on Cisco 877 ADSL

I recently got BT Business Broadband via work for home office use and I'm currently using a Cisco 857 for the ADSL modem & router

The connection came with 5 useable public IPs which is really handy, however due to the weird way BT actually assign the IP addresses to the dialer interface, you can't just leave this on negotiate and expect it to get the IP address BT have assigned to the router. If you do you get a dynamic IP from BT which is a pain.

To work around this you need to create a loopback interface, e.g. loopback0, and configure this with your allocated IP range, e.g.:

interface loopback0
ip address 80.12.34.56 255.255.255.248

You then need to assign this loopback to the dialer interface:

interface dialer1
ip unnumbered loopback0

You also need to remember to NAT traffic using the IP address of the loopback0:

ip nat inside source list 10 interface loopback0 overload

That all seems to work pretty nicely however I did run into a problem where if I ping a public IP from the router itself or an attached client PC, the first ping is dropped. This is because the router is doing an ARP request on the public interface to try and find who has the public IP you are pinging, an while this is happening the first ping is dropped. To get round this you need to configure the following on the dialer interface:

no ip proxy-arp

This resolved my issue where the first packet was dropped when talking to any 'new' public IP. The issue also manifested itself as webpages taking a couple of extra seconds before the page started loading.