I noticed that the model IDS-4210 does not do INLINE inspection on software 5.1(3)
Will it do on newer versions ? or the 4210 cannot do it period ?
Yes and No
The scheme you wrote up is right, but it does NOT route between vlan 1 and vlan 2.
The IPS will instead switch or bridge packets between vlan 1 and vlan 2.
What this means is that the IP Address on the router's vlan 1 interface MUST be in the same IP Subnet as the IP Address on the inside vlan.
The IPS will simply take the packets on vlan 1 and put them on vlan 2 (and vice versa), it will not "route" packets between 2 IP Subnets so the same IP Subnet must be used in both vlan 1 and vlan 2.