The Arduino Mega 2560 should receive a 7-12V power input vias its VIN pin.
My question is, I am currently planning on using 12V battery source as power input for the Arduino. However, the battery source will also power other components. Is a buffer or some sort of protection circuitry necessary to isolate the Arduino from the other componenets?
They make 3-terminal regulators that are able to take up to 40V input and have a fixed output. You would do well with something like an LM7809 which is a 9V, fixed output regulator. No way I would trust the 12V battery to never go above 12V. If it's a car battery for example they are nominally 12V but fully charged they are 13.2V. That might let all the nice smoke out of your Arduino. There are also more expensive DC-DC converters available. One that has a wide input range and 7-10V output would be good.
Personally I would just use a switching regulator that outputs 5v and then plug the output into 5v this should work but it is untested. This is better than the built in linear regulator the arduino has. I have had times where I plug in voltage in range to VIN and the linear regulator gets hot fast this is because lots of energy is being wasted as heat.
I see the arduino's voltage regulator isn't terribly strong. So I would have to add an external one.
Thanks for the input!
Hi, I agree with the other posts, a regulator between the battery and arduino, your 12V battery can have up to 14.2V on it if it is being charged, as to going linear or switchmode is up to you.
If your project is a permanent installation I would have any external hardware that uses 5V, get their power from a separate 5V supply drawing from the 12V, not the arduino onboard, not only do you have overload problems but I would wonder about PCB track width and current capacity.
Also use plenty of bypassing on the power supply connections to prevent any interference with the arduino CPU.
Tom..... 
12v is the highest advisable input voltage, but it is not the absolute maximum safe input voltage. The product page lists 20v as the maximum input, so whether your battery is 12.0 or 13.2 or 14.4v, you won't be releasing any smoke. Very little in electronics is that intolerant of variation. Just for fun, go find all the wall-warts you can round up, look at the badge that tells you what their output voltage is, then measure them for yourself. Are they exactly as specified? Usually not, sometimes not even close.
With a linear regulator, your limiting factor is heat. Excess voltage is reduced by converting it to waste heat, so the bigger the difference between the input and output, the more heat is generated. This is made worse with current draw, so if you're going to power anything beyond the Mega itself, 12v (even 12.00v) is going to make the regulator run hot.
You have three options:
Heat-sink the onboard regulator, or otherwise keep it adequately cool.
Use a pre-regulator. This isn't anything fancy, it's just another plain old regulator that can share the voltrage drop burden. Someone mentioned the 7809 as an intermediate step. That would work, but whether you waste the excess voltage in one regulator or two, it's still a waste. You've just increased the cooling surface area.
Use a switching regulator and optionally bypass the on-board linear regulator. Switching regulators are inherently more efficient than linear regulators, and can therefore often supply more current -- if that's useful in your case.