I assume provider you described is Ziggo? There's technical description of their solution on http://www.technischweekblad.nl/hotspot-groningen.297341.lynkx. Google translate turns it to good enough English.
Ziggo tunnels visitor traffic so customer that hosts access point don't need to worry about cops knocking on door due someone else abusing connection. It's same way Finnish provider "Wippies" did years ago before closing down. This is also right way to solve this problem and also fixes at least routing and session persistence issues with roaming between access points. Other roaming issues such as client sticking to distant AP may still be present if there's no AP-to-AP RF management features like those in Aruba, Cisco etc. enterprise wireless (controller based) solutions.