Cisco 1601R with IOS 12.0.22 and Nat

Layout

Note:

  1. The 1601R only has one ethernet port, so I use "interface loopback0" to overload it with two IP addresses (one public: 193.0.0.1, and one private: 10.0.0.1). In addition to routing, the 1601R performs NAT between networks 10.0.1.0/24 and 193.0.0.0/24
  2. The two Cisco's are connected with a cross-over cable acting as DTE-DCE
  3. The NAT address pool runs from 193.0.0.2 through 193.0.0.254

Configuration files

2501

version 12.0
service timestamps debug uptime
service timestamps log uptime
no service password-encryption
 
hostname 2500
 
enable secret 5 $1c/Mh$hZ0o6FkS7xYH2ak7LOfAS1
enable password cisco
username toto password 0 cisco
 
ip subnet-zero
no ip domain-lookup
 
interface Ethernet0
    ip address 195.0.0.1 255.255.255.0
    no ip directed-broadcast
 
interface Ethernet1
    no ip address
    no ip directed-broadcast
    shutdown
 
interface Serial0
    ip address 194.0.0.1 255.255.255.0
    no ip directed-broadcast
    encapsulation ppp
    no fair-queue
 
interface Serial1
    no ip address
    no ip directed-broadcast
    shutdown
 
no ip classless
ip route 193.0.0.0 255.255.255.0 194.0.0.2
 
line con 0
    transport input none
line aux 0
    password cisco
    login
    modem InOut
    transport input all
    flowcontrol hardware
line vty 0 4
    exec-timeout 0 0
    password cisco
    login
 
end

1601R

version 12.0
service timestamps debug uptime
service timestamps log uptime
no service password-encryption
 
hostname 1601R
 
enable password cisco
 
ip subnet-zero
no ip domain-lookup
 
interface Loopback0
    ip address 193.0.0.1 255.255.255.0
    no ip directed-broadcast
    ip nat outside
 
interface Ethernet0
    ip address 10.0.1.1 255.255.255.0
    no ip directed-broadcast
    ip nat inside
 
interface Serial0
    ip address 194.0.0.2 255.255.255.0
    no ip directed-broadcast
    ip nat outside
    encapsulation ppp
    no ip mroute-cache
    clockrate 64000
 
ip nat pool ip-pool 193.0.0.2 193.0.0.254 netmask 255.255.255.0
ip nat inside source list 1 pool ip-pool
ip classless
ip route 195.0.0.0 255.255.255.0 194.0.0.1
 
line con 0
    transport input none
line vty 0 4
    login
 
end

Issues

From the 10.0.1.2 host, I can't ping any address in the 195.0.0.0/24 network (either router or host.) debug ip packet displays a single line:

IP: s=10.0.1.2 (Ethernet0), d=195.0.0.2 (Serial0), g=194.0.0.1, len 60, forwardq

FYI, the 195.0.0.2 can ping

Note: On the other side of the network, host 195.0.0.2 can ping the 1601R's public ethernet address 193.0.0.1 just fine.

How to avoid using a small network to connect the two routers (ie. get rid of the 194.0.0.0/24 network)

I was told about using ip address unnumbered, and simply use one of the IP addresses used in the public networks on each side. Can this be done with the 1601R? Are there any drawbacks?