Various WiFi devices can operate as IP routers, or can operate in a mode analogous to an Ethernet switch in a wired LAN. The former is common. The latter is called an Access Point (AP) or sometimes as bridging.
APs are less common in small networks, but are very useful in larger networks; when you have multiple WiFi devices, or WiFi devices that are operating in multiple bands (eg: a and b/g), or when you want to use network-based authentication servers or such. APs let clients move between WiFi devices whether simply moving around in a building, or as a result of the usual sorts of maintenance and reconfiguration tasks that can be required with a network device; WiFi device reboots. Without dropping connections when traveling between APs. A WiFi router knows about the IP addresses and adjacencies and gateways and such, and will tend to drop connections when you're switching between WiFi devices. An AP looks more like a hunk of Ethernet wiring from the perspective of an IP network and of IP routing; an AP is comparatively transparent to IP.
Using an AP does mean that devices "behind" the AP can be needed to serve DHCP requests and such. This might be an IP router, or a Mac OS X Server box, or something else. (Though various APs can be configured to serve DHCP when operating as an AP, recognize that you only want one DHCP server.)
I would expunge as much NAT as I can manage. In particular, here get yourself a subnet allocated in your existing larger 192.168.0.0/16 block for the building, and use that.
As a general rule, I avoid using the 192.168.0.0/16 block in any LAN I install as it tends to lead to routing conflicts, too. For lack of better terminology, that block is what I consider the "home and SOHO and coffee shop IP block." Everybody uses it. Why is this bad? if the VPN client is in the same subnet as the remote LAN on the far end of the VPN connection, then IP routing can get confused. Do try setting the "send everything via the VPN" setting. And yes, re-addressing your building's IP LAN out of 192.168.0.0/16 is probably not within your portfolio.