Is it possible to control access between clients on same LAN with a firewall?

Dear all,

I was just wondering how people control access amongst machines on the 
same subnet (LAN) that are protected by the same firewall.

In my case, the firewall is a home router (WRT54G) running DD-WRT, so 
iptables is the firewall there.

Presumably as with all firewalls, once a packet is not being sent to the 
firewall itself or forwarded through the firewall towards another 
network, the firewall will not protect machines behind the firewall from 
each other. Perhaps as a result of the built-in switch, packets don't 
get up to layer 3 and so the firewall is oblivious to inter-LAN packet 
traffic.

It would be nice to be able to restrict some LAN clients from talking to 
each other, perhaps by layer 3 filtering. For example, it may make sense 
to prohibit the network printer from talking to a web server and vice versa.

Is there away to force/make it easier for the firewall to inspect 
inter-LAN packets. Perhaps examining packets at layer 2 could capture this.

I understand that one solution would be to install a local firewall on 
each machine.

This is just a general question, so that I might better understand the 
area of "inter-LAN" protection.

While it may be possible to have a firewall to not just protect traffic 
from Internet to LAN and LAN to Internet but also LAN to LAN, it may not 
be a practical thing to do.

Any comments or insights are welcomed.

regards,
Will.