Is it possible to route PPPoE over a VLAN?

I currently have a firewall (IPCop) located in my loft adjacent to the master socket. This is connected to a Netgear DM111P ethernet modem in bridging mode. My server is in my office which is at the bottom of my garden and I have an ethernet connection between a gigabit switch in my loft and another in the office. I'd like to ditch my physical firewall in favour of a virtual firewall running on the server.

Both the switches are managed, and I was wondering if it would be possible to setup a VLAN to route PPPoE packets to a spare NIC on the server and use this as the RED interface for the firewall. The GREEN interface of the firewall will link to a virtual switch and back out of the main server NIC, enabling firewalled access to the rest of the network (and back to the house over the same ethernet connection).

Does this sound plausible? It would mean the only items in the loft would be the ethernet ADSL2+ modem, a wireless AP and the gigabit switch.

Regards,
Jason.

Googling for pppoe over vlan looked pretty encouraging

Assuming all your hardware is well behaved this is perfectly possible. VLAN tags in an ethernet frame sit between the source and the EtherType field of an ethernet frame. (See "Frame Format"). There's still an ethertype field in VLAN tagged frames that PPPOE can set for its frames as normal, devices that don't understand 802.1Q disregards it as a broken frame and everybody is happy.