well you'll be running a DHCP client on eth0 that's really the only difference. run DHCP client etho and DHCP server eth1, as long as the masquerading is setup properly it will still work seamlessly despite the dynamic ip being received on eth0.

man dhcpd
Start dhcpd with eth1 option.

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If you have a dynamically assigned IP address from your ISP, substitute the appropriate lines from the ones below:

iptables -t nat -A POSTROUTING -o eth0 -j MASQUERADE
for
iptables -t nat -A POSTROUTING -o eth0 -j SNAT --to YOUR.IP.ADDRESS.HERE
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if eth0, the nic connected to the internet, is going to be getting it's ip info via dhcp from isp, just change the properties of eth0 to obtain it via dhcp, and also change your iptables command, if you've copied them into your rc.local file, to reflect the changes above for the one line noted above... that will be the only changes that you will have to make if switching from eth0 being statically assigned to dynamically assigned... and you should be set from there on.....

Ok, been working with it and the dhcpd on eht1 is working fine. I would like though to have a full working DNS server with DDNS working. I have forward and reverse files, but I want to dynamically update the zone files with DHCP. I cannot seem to find enough docs on this. I have found a few things but not an exact... DO THIS type of thing.

Ideas??

Search in DNS documentation 'dynamic update'

I did... not enough. I bought DNS & Bind orelly book. It breifly touches on it. I did find the Bind Administrator Referance... going to see if that helps.

Any ideas on DHCP dynamic update or where a good example is?