ie PC1 <-> WHS PC <-> PC2 <-> router
^ can each PC connect to each other and the internet in this case?
Are you saying the WHS can act as a router, if so what benefits or features does it offer?
What is your source that WHS allows network bridging? The following thread suggests that there is no such feature in WHS: http://forums.microsoft.com/WindowsHomeServer/ShowPost.aspx?PostID=1744498&SiteID=50

Yes. That is the essence of a server. Why not connect the router, or better yet, the modem directly to the whs and let it share your internet connection instead of the router.