Are intruders in a local network able to mask their local IP in any way? Could they 'hijack' another local IP and perform scans and exploits from there?
One way to go would be with ARP spoofing. It can be used to put your node as a gateway for the network.
Funny you ask that, I've been doing tests on that and the only thing I was able to spoof was the mac-address in Linux Backtrack such that I was able to tell my switch that I am another PCs mac address but NOT IP address such that I could see all the data being sent to the other PC and go on undetected (Man in the middle attack). You can however mask your public address using HideMyIp , a certain software I came across the piratebay. You can also use the TOR browser bundle. If you want to verify that HideMyIP or the TOR browser bundle are working go to 1 [What Is My IP] and it can tell you your location. Download hide my ip from 2 [Hide My IP]. The tor bundle 3 [TOR] . So it most definitely is quite possible unless all ports / sharing is blocked on your network.
You can easily set your up address as static and then change your Mac address to match that of the real hardware at that ip but I have not tried this and dont know how it would work in practice.. could create some interesting results when it comes to port jacking etc.