I've got the following problem running pppd 2.3.10-3 on RedHat 6.1,
Kernel 2.2.12-20 or 2.2.16-21

(Reviewing bugreports I found one more mentioning of the same problem
by peter in bug ID6295, but not answered)

So the problem:

There is a host connected to a LAN/WAN via Ethernet having a modem
(ppp server). It's IP is N.
The remote host connecting via modem line has no other connections
and pretend to use IP M. (M is a legal IP on the same subnet as N
known by DNS and not used by any machine) 

So on server side /etc/ppp/options contains addresses N:M.
On the client side - just the reverse M:N.
(no other options files exist, command line options aren't used)
pppd is suid root, so it can and it does read /etc/ppp/options
(I'm sure it does because other options like debug,proxyarp,
noauth are working)

When I start pppd on server as root - everything works fine.

But if I start pppd on server as ordinary user ppp0 interface
on server is getting IP address N+1 (!!!).
And that cause a trouble on the LAN - it's an IP of other running
machine.

What is the reason? Why it ignores an IP given in options file and use
some other of it's own choice?
Even if setting IPs is a priveleged option (which seems not to be the
case according to man page) it's coming from a priveleged source - it
should work...