In some applications the remote panel would only be 5 to 10 m away. In this case a custom cable solution would do, power & data. I was hoping this could be done over Ethernet so that the distance would only be limited by the Lan limitations. It would also mean that the panel could be located wherever lan is available. Possibly even POE. I am aware that there are products out there that can do this kind of thing like Modbus,Rs485 over Ethernet for example but, I am trying to make this as proprietary as possible and with a micro I should be able to make changes easily as the system evolves. I would like to power the remote from the master for some applications and for distant Lan setups local power to the remote is fine.
Those are really two quite different use cases. If you are using Ethernet, you can make use of ethernet infrastructure such as routers, DHCP, DNS, NTP etc. If you are point to point, you might not even need a hub but would not have access to all those other services.
Arduino used to do an Ethernet shield with POE module, I think it got canned, but there are some cheap alternatives available.
Not sure what "proprietary as possible" means, Ethernet is all open standards. I don't think you want to develop your own ethernet protocols?
For point to point, Ethernet is overkill, and RS232 or RS485 would do fine. You don't have high speed data requirements. Not sure what you have against RS232, it is cheap and simple. If you prefer use RS485, it's also cheap and only slightly less simple.
If you are new to Arduino I would recommend going for the simple option first. You should be able to get the application working with 232/485, and then if you want to have the LAN option then get hold of the Ethernet shields, but bear in mind it will be a little more complex and you will also need ethernet hubs that support PoE. It should be possible to also use those for a point to point link with a crossover cable, and maybe some custom connection to provide power from the master device.