Hey NJITGRADCB,
A couple of weeks ago I took our Wii-U to a cabin in Wyoming, which is about 16 miles from the nearest intelligent life form, let alone a wireless signal. The gamepad experienced the same issue, although instead of a 2-3 foot range, I was able to get it to about 5-6 feet.
So I think sadly your console has caught the bug and no amount of distance away from your router will fix the problem. Plua, if I remember correctly the WRT54G is an older router that doesn't broadcast on the 5GHz band.
I would contact Nintendo support right away to complain about the problem, but do NOT agree to have them repair your Gamepad for a fee.