Chris, I'm certainly no expert on the subject, but I'm pretty sure your real IP address SHOULD NOT be showing up when running some form of a VPN on either a PC, or a router.... I could be wrong, but that kinda defeats the whole purpose of using a VPN in the 1st place. OTOH, I suppose, based on what you're saying, that sort of setup is merely encrypting the data, so it makes your usage anonymous, rather than your location, whereas using an "external VPN", such as what we use, does both.
As for the encryption slowing down your speed, yes, to some degree, but I expect it depends on several factors. Just out of curiosity, I just did a few speed tests here. As mentioned earlier, we're near Vancouver, and using Shaw as our ISP, and our speeds are supposed to be 75Mbps down/7.5Mbps up, but we usually get ~85/8.5. I first did a speed test to a server in Burnaby, and got 85/8. I then connected to our VPN's(Private Internet Access) Vancouver server, and then did a speed test to the same server in Burnaby, and got 80.5/7.7. To check further, I then connected to PIA's Silicon Valley server, and did a speed test to the same Burnaby server as the 1st two tests, and got 80.25/7.5, so yes, some speed loss, but not that significant. Of course, YMMV.....