Well the only reason why I use external switches is offload the router switch into external switch better throughput. But you can use old router and disable the DHCP on it to use an external switch. Once these routers only had the WAN port and 1 LAN port then you had to get external switch to extend your network. Today you got 4 ports switch right on top of the ANTs.
If you keep on getting drop outs from the LAN to LAN then the router is faulty. But you need to do some other testing like get external gig switch. Don't you have 54 and 100mbps running as well?