Well, yes actually, it is better to have a seperate modem and router for WDS because both of the routers must have the broadcom chipset to support WDS.
"So, does Buffalo then recommend that I use a simple ADSL modem, andhook that up to a WHR-G125 to serve as my principle wireless router -with a separate WHR-G125 (running in 'bridge' mode and connected to the'master' router by WDS) in each room where I want to create an Ethernetconnection?"
In terms of needing one in each room, that would depend on the strength of the wireless signal. Besides that, this is exactly what I would recommend.