Here's what ended up working, via: http://discussions.apple.com/thread.jspa?threadID=2725432&tstart=0
The following are the basic steps to configure a "dynamic" WDS with the 802.11n AirPort Express Base Station (AXn) being extended by the 802.11n AirPort Extreme Base Station (AEBSn). Please compare them to what you attempted to see if anything was missed.
One thing to note is that the AXn is not capable of providing simultaneous dual-band operation like the AEBSn. That said, you will only be able to extend the 2.4 OR the 5 GHz radio of the AXn. Since the lower frequency band travels longer distances, I would suggest extending it.
o If practical, place the base stations in near proximity to each other during the setup phase. Once done, move them to their desired locations.
o Open AirPort Utility and select the AXn.
o Choose Manual Setup from the Base Station menu. Enter the base station password if necessary.
o Click AirPort in the toolbar, and then, click Wireless.
o Choose “Create a wireless network” from the Wireless Mode pop-up menu, and then, select the “Allow this network to be extended” checkbox.
o Next, select the AEBSn, and then, choose Manual Setup from the Base Station menu. Again, enter the base station password if necessary.
o Choose “Extend a wireless network” from the Wireless Mode pop-up menu, and then, choose the network provided by the AXn from the Network Name pop-up menu.
o Enter the base station network and base station password is necessary.
o Click Update to update the base station with new network settings.
There shouldn't be any issue with using the Airport as an extender in that scenario.
Normally an Airport can only extend the wireless network by providing a bridge over Wifi between itself and another Airport (or Time Capsule)
Using an Airport as an extender with a non-Apple router requires you to connect the two using ethernet, usually with a physical cable however by using a powerline connection that will replace the physical cable with the Ethernet over powerline.
A few caveats, if you are using MAC address filtering on the ethernet interface of the devices, make sure you add the MAC addresses of the Powerline module connected to each as required. Normally most routers only limit MAC address filtering to the Wifi interface, but there are some that will alow you to enable this on all interfaces.
Edit: There shoudn't be any issue with using the AirTunes functionality under this scenario either as well as it providing the required Wifi extension.
Best Answer
Any time you try repeat a wireless signal you'll sacrifice data speeds.
This "feature" isn't highly pushed on the Airports because of this. I've seen no consumer wifi routers/repeaters that do this well.
Your best bet is to run an Ethernet cable and setup the airport express as a second access point. Use the same SSID and password as your Extreme and your devices will pick the stronger signal.