The AP1200 does not / will not act as a firewall. The olny level of protection offered is in the form of authentication and encryption of the traffic to the wireless client.
Unless you specifically configured it, there is no DHCP server configured on the AP1200. It is possible, it can do it, but it a command line configuration (no web/gui, no default).
As far as protection, there are a number of ways (as always). You do not mention which (if any) authentication and / or encryption system you are using (i.e., WEP, WPA, 802.1x ...).
For maximum security, WPA with EAP-TLS is about as good as it gets ... but requires a RADIUS server and a certificate system. I get the impression that this would be a difficult system for you to implement.
Probably the best compromise between good security and ease-of-use would be WPA-PSK (PSK = "Pre Shared Key). With this system, you get very solid encruption, but it uses a "passphrase" as the seed to the key generation. To be very secure, you need to use a "hard to guess" passphrase ... if someone can figure out your passphrase, the system will not be secure.
WEP(40 and 128bit) has been cracked and requires only a little effort to break into your system. It will take a little time, but the "How To" has been published in many places around the Internet and somewhat automated ... minimal effort.
You can use an open system (no encryption, no authentication on the AP), then use a VPN system to actually gain access to your network (VPN could be an appliance, or a server -MS, Linux, or Unix-).
If you use an open system without the VPN, then anyone passing by could gain access to your network. Without a firewall (process or device) between them and your AP, your clients would be exposed.
Hope this helps.
Good Luck
Scott
