The good thing is that i can ping the other end of the tunnel which is great.
It is often used to set up VPNs, and it works by encrypting IP packets, along with authenticating the source where the packets come from. IPsec helps keep data sent over public networks secure. IPsec is a group of protocols for securing connections between devices.
Cisco VPN Client does not use any MAC address. Cisco IPSEC VPN client does not use option 61 and there is no way you can push a MAC address from the Cisco VPN Client.
It is unrelated to VPN client dhcp-client update dns command. i.e ASA outside interface has 'ip address dhcp' configured. This command is used when the ASA itself is a DHCP client.