Hi,
I'm also working on a similar project as you, hope to see some ideas from you!
For now, I've a Mega connected via I2C to the ethernet module (W5100 + arduino together), and the ethernet card has about 20 meter cable (cat 5e) to my router.
It's all working fine here, so I think the distance isn't the problem.
Maybe the power isn't enough? Have you tried a 7,5 volt power supply?