So I thought I'd try it again, but I plugged the pap2t just directly into a regular jack then a phone into another jack. This seemed to work both ways.
So I tried with the Etp connection again. Same as I'd first experienced - incoming only. Then move to the 2nd scenario again. Same jacks, same phone - also only allowed incoming only....nothing would work until I plugged my phone directly into the pap2t.
What could affect this? I know I have one phone line that has just been cut (and not terminated - in a jack or anything, it's just a loose cut). Could that cause this out of problem, or is there some rx/tx wire mismatch happinening somewhere?