I did this application before, then I took it to the tenth power. Of course you can cut the vonage over as analog trunks, and it works just fine. Then I took 20 vonage lines and flipped then into an Adtran TA850 with FXO blades. I was then able to pass it off to the PBX via DS1. For this, I built a Lesat Cost Route so all LD would use it, and this alleviated there previous trunking issues.
However under this configuration I had issues with CLID. I did this on both a Definity (r10 if I remember), and an IP Office which was this post:
Incoming Caller ID on T1 via Adtran FXO
The Definity was flawless, the IP Offce had some trouble.
Inbound worked as expected. You can login to Vonage's website and buildout your hunt groups and even fail-over automatically upon network failure, that was pretty slick. I turned off all of the features it didn't need like CW, VM, etc. And I played with the audio compression and they were happy enough with the lowest compression setting.
So if you have someone spending stupid money in LD, cut one of these over and save them a boat load. Ensure that they have a real large internet pipe, like 1MB Upload minimum (depends on the compression of course). I cutover a cable modem with this dedicated, (cost like $300/month) and for $1300/month they saved huge. With almost unlimited LD, and 6 different out of market numbers (they wanted, could have more obviously).
If nothing else, it was a lot of fun, and it worked!
-CB